Most Americans don’t bother to question sales tax. It is something that most of us have grown up with our entire lives, so it has become ordinary. However, normality of sales tax starts to get muddled when a company begins to export overseas. Many countries use tariff and import fees that are not common in the United States.
Import tariffs and duty rates are unique to the country they exist in. For example, in less developed countries the tariff rates tend to be higher than in more developed countries. Seven of the 10 countries with the highest corresponding tariff rates can be found in the less developed region of sub-Saharan Africa.
Developing nations tend to have “protectionist policies”, where import fees are high on specific items in order to help boost domestic industry. In others, higher import fees can be found on luxury items, such as cars, where the product is seen as having a significant social impact.
It does not matter what good you plan to export, shipping overseas to a new country can bring up unforeseen compliance issues. Value added tax (VAT), good and services tax (GST), and import duties, or special tariffs, can all add significant costs to overseas sales. The total sum of all of these costs for an item shipped transnationally is called the landed cost.
Manually trying to calculate those landed costs can be almost impossible when shipping to unfamiliar countries, most often because a component can easily be forgotten. Even with stellar memory, a mistake about a jurisdictional border or outdated information could mean extra charges to your customer or a chunk of profit disappearing.
Landed costs can be made even easier with Avalara LandedCost, a cloud-based automation of landed cost calculation. Leave the jurisdiction borders, memorization and updated information to them. State of the art calculations get rid of custom surprises, keeping customers happy and your business growing.