Business expansion overseas is a great way to increase your reach and reputation. The prospect sounds quite appealing and without a doubt, acts as a great boost to your bottom line. However, venturing into international waters (literally and figuratively!) is not all that easy. It can be quite a challenging task and requires a lot of research in terms of tariff and duty rates. Each country has its laws and regulations that need to be taken into consideration while shipping internationally.
We bring you some of the most common pitfalls experienced by companies during international shipping. While most of these often take place in businesses or companies that are new to international shipping and have just begun their expansion and shipping ventures, you might also find well-established firms making some heavy custom duty tax mistakes. Read on to know what these mistakes are and make sure that you are not putting your business at risk of fines and penalties by avoiding these.
Assuming that tax is consistent across all countries: This makes for one of the most common mistakes made by first-timers. Every time you get an order from a new country, you need to deal with new import taxes, tariffs, and duty obligations with different rules, rates, and forms. The custom formalities change at every international border and even for neighbouring countries, bringing about a drastic change in the functioning.
Not keeping up with tax developments across the world: It is a tedious task to get the right duty rates and customs charges for the full range of your product portfolio. More often than not, once a company calculates these rates, they tend to remain the same for years, disregarding the tax updates in the respective country. This becomes a problem because rates and taxable products tend to change constantly. A rate that was valid last year may no longer be accurate and might lead to a refusal in shipment due to the false high import taxes.
Undervaluing and misdeclaring goods: Although a false activity, many businesses engage in this act. They deliberately misdeclare a type of item as another or undervalue the shipment of goods to avoid payment of a higher duty tax. A classic example of this is how some companies always fill out a low estimate value in a shipment, regardless of the actual value to bring the products under duty-free or low-value custom policies.
Governments are aware of this method and are trying to narrow down on these defaulters, while the custom authorities are developing profiling tactics that help them conduct a detailed examination and evaluation of the shipments.
These are a few things to keep in mind while dealing with import duty rates and tariffs for international shipments. It is best to chalk out a plan and a quarterly renewal of your rates to avoid such delays. This would make your expansion fault-free and a complete success.
