Aliexpress dodgy GST tax

[c64]

For shipping to Australia, Aliexpress must charge 10% GST. However, for most cheap items, it's usually more than 10%.
For example, I've seen something on special for less than $1 delivered, and they want to charge more than $1 just for GST.

Is it even legal?

[Kim Christensen]

Probably because the concept of "free" or "cheap" shipping is BS.
In other words, the full/partial cost of shipping is built into the price and Aliexpress takes your country's tax rules into account.

[brucehoult]

Probably because the concept of "free" or "cheap" shipping is BS.
In other words, the full/partial cost of shipping is built into the price and Aliexpress takes your country's tax rules into account.

A few months ago I bought a car media player / AirPlay / Android Auto device from Ali. Some stores had it for $30 plus $20 shipping to NZ. Some had it for $50 with free shipping.

Makes no difference, and GST is charged on the shipping-inclusive cost anyway.

[wilfred]

It is all to do with the psychology of buyers and having your item seen. If people sort on cheapest first it is better to lower the price and add shipping. I haven't had to test it but I imagine shipping is not refunded otherwise I can't fully understand unreasonably high shipping costs. I dislike paying shipping and will try to find a way to get to the $15 free shipping point which seems common. I won't buy something just to avoid shipping which I know is built in to prices anyway.

It takes more time analysing it even for pretty cheap stuff I typically buy than I like spending. I end up with a vacuous sort of vibe built from various factors including feedback and quantity sold to help me just stop and commit.

At least shipping is faster than it was 4 years ago when I had a spurt of buying on Aliexpress. Some things arrive in a week here in Australia.

[brucehoult]

At least shipping is faster than it was 4 years ago when I had a spurt of buying on Aliexpress. Some things arrive in a week here in Australia.

I believe Aliexpress has a warehouse in Australia with, presumably, some of the more popular stuff, as they do also in the USA and EU.

[retiredfeline]

Where do you see that you are charged at least $1 GST? I've always paid 10% no matter what the total (price + shipping). AliExpress is registered in Australia and is obliged to collect GST.

Shipping charges are a different matter, it's up to the seller and some sellers tempt buyers with cheap prices but the shipping is expensive. I look for companies that will sell multiples units or items with minimal increase in shipping cost.

PCB orders fly under the GST radar because the firms are not registered in Australia and the GST is too small to collect.

[pcprogrammer]

PCB orders fly under the GST radar because the firms are not registered in Australia and the GST is too small to collect.

Don't know how it works down under, but when I order from JLCPCB they add VAT (GST) to my bill.

On a side note global sales tax sounds more honest than value added tax. The tax does not add real value to an item, it just makes it more expensive. 

Semantics I know, but I'm a bit of a nerd on that. 

[brucehoult]

On a side note global sales tax sounds more honest than value added tax. The tax does not add real value to an item,

That is not what it means.

VAT means a tax on the value an entity adds to goods.  E.g. if you pay $10 for some parts, pay someone $2 to assemble them into some novel thing, and sell it for $20 then you have added $8 of value and you'll be taxed on $8.

[retiredfeline]

Don't know how it works down under, but when I order from JLCPCB they add VAT (GST) to my bill.

Imports of any amount are liable for GST but enforcement varies. Probably if I ran a company and ordered hundreds or thousands of dollars worth of PCBs, customs would withhold delivery until I paid it. Or some other arrangement has to be made to streamline delivery. For ten or twenty dollars orders, it would eat up more of their time than the tax collected so they waive it.

BTW GST is not Global Sales Tax, it's Goods and Services Tax.

[pcprogrammer]

On a side note global sales tax sounds more honest than value added tax. The tax does not add real value to an item,

That is not what it means.

VAT means a tax on the value an entity adds to goods.  E.g. if you pay $10 for some parts, pay someone $2 to assemble them into some novel thing, and sell it for $20 then you have added $8 of value and you'll be taxed on $8.

That may have been the initial idea behind it and sounds better than how it seems to be used. Because when I look at a bill from something I buy, I see the price without tax and the percentage of tax, which varies from 0 to 20%, at least over here in France, and the total I have to pay. In NL the max is 21% for as far as I'm up to date.

Some foods are taxed at lower rates, and I recently found that for anything concerning renewable energy is taxed at 5.5%

When I ran my own business I had an hourly rate and on top of that I charged at that time 20% of VAT (BTW in NL), which at the end of a quarter I had to fork over to the state. On the other hand any VAT I paid on goods or service for the business I could subtract from the amount I had to fork over, or even receive back if it was more than what I collected.

Has been subject for fraud, and probably still is, with the moving around of money in some way.

We live in a world where total tax has never been as high as it is now. And it still ain't enough for their needs. 

[tszaboo]

Where do you see that you are charged at least $1 GST? I've always paid 10% no matter what the total (price + shipping). AliExpress is registered in Australia and is obliged to collect GST.

Shipping charges are a different matter, it's up to the seller and some sellers tempt buyers with cheap prices but the shipping is expensive. I look for companies that will sell multiples units or items with minimal increase in shipping cost.

PCB orders fly under the GST radar because the firms are not registered in Australia and the GST is too small to collect.

In the EU, they will just slap a ~20 EUR import tax + VAT administration fee to your item. And then VAT to the administration fee. So your 1 EUR item would be ~26 once it gets here.

[wraper]

Where do you see that you are charged at least $1 GST? I've always paid 10% no matter what the total (price + shipping). AliExpress is registered in Australia and is obliged to collect GST.

Shipping charges are a different matter, it's up to the seller and some sellers tempt buyers with cheap prices but the shipping is expensive. I look for companies that will sell multiples units or items with minimal increase in shipping cost.

PCB orders fly under the GST radar because the firms are not registered in Australia and the GST is too small to collect.

In the EU, they will just slap a ~20 EUR import tax + VAT administration fee to your item. And then VAT to the administration fee. So your 1 EUR item would be ~26 once it gets here.

It's just VAT collected at sale through IOSS if it's <EUR150. Otherwise it depends. In Latvia, as individual I can do simplified customs clearance myself with zero additional fees for <EUR1000 shipments. As a company, I do full blown much more complicated clearance myself too, no additional fees for post, fedex and ups. DHL bastards want to collect "document processing fee" if you don't delegate them doing clearance (was EUR 14 last time I used them) so I didn't use them for years.

[pcprogrammer]

In the EU, they will just slap a ~20 EUR import tax + VAT administration fee to your item. And then VAT to the administration fee. So your 1 EUR item would be ~26 once it gets here.

Only when the shop you are buying from does not handle the VAT themselves. Then the postperson will knock on your door and collect the VAT + administration fee from you.

Aliexpress handles the VAT for you, so no problem there. But that said, the shipping cost are increasing making it less and less interesting to buy stuff from them.

[brucehoult]

On a side note global sales tax sounds more honest than value added tax. The tax does not add real value to an item,

That is not what it means.

VAT means a tax on the value an entity adds to goods.  E.g. if you pay $10 for some parts, pay someone $2 to assemble them into some novel thing, and sell it for $20 then you have added $8 of value and you'll be taxed on $8.

That may have been the initial idea behind it and sounds better than how it seems to be used.

But as you yourself describe later, you pay VAT on the difference between your inputs and your outputs. And get a refund if your outputs are worth less than your costs.

Because when I look at a bill from something I buy, I see the price without tax and the percentage of tax, which varies from 0 to 20%, at least over here in France, and the total I have to pay. In NL the max is 21% for as far as I'm up to date.

And that's pretty stupid and adds huge costs, both to dealing with different rates on different things, but also paying people to decide which rate is for which thing. e.g. basic food such as cookies is 0%, but luxury food such as chocolate is 20%. So which is biscuits coated with a layer of chocolate? Does it depend on the thickness of the layer? etc etc, on a million different goods.

Here in New Zealand everything is 15%, no variations, no exceptions. If poor people can't afford basic food, given them money directly, don't muck about with the tax rate on the food.

Some foods are taxed at lower rates, and I recently found that for anything concerning renewable energy is taxed at 5.5%

I recall somewhere in the USA there being different tax rates on a coffee drunk in the shop, and a take-out coffee from the same shop. As I recall, take-out had the higher rate. I could say I'd drink the coffee in the shop, and then actually walk out with it and THEY COULDN'T STOP ME BWAHAHAHA

[tszaboo]

In the EU, they will just slap a ~20 EUR import tax + VAT administration fee to your item. And then VAT to the administration fee. So your 1 EUR item would be ~26 once it gets here.

Only when the shop you are buying from does not handle the VAT themselves. Then the postperson will knock on your door and collect the VAT + administration fee from you.

Aliexpress handles the VAT for you, so no problem there. But that said, the shipping cost are increasing making it less and less interesting to buy stuff from them.

Of course. Only if your seller doesn't handle import tax and VAT. You want DDP incoterms, because somehow doing the same VAT handling is practically free, while in Europe some automated process to send you a link to pay VAT in an email or phone message is 25 EUR.

[wraper]

In the EU, they will just slap a ~20 EUR import tax + VAT administration fee to your item. And then VAT to the administration fee. So your 1 EUR item would be ~26 once it gets here.

Only when the shop you are buying from does not handle the VAT themselves. Then the postperson will knock on your door and collect the VAT + administration fee from you.

Aliexpress handles the VAT for you, so no problem there. But that said, the shipping cost are increasing making it less and less interesting to buy stuff from them.

Of course. Only if your seller doesn't handle import tax and VAT. You want DDP incoterms, because somehow doing the same VAT handling is practically free, while in Europe some automated process to send you a link to pay VAT in an email or phone message is 25 EUR.

Don't mix IOSS with DDP, very different things. Not to say you assume clearance process and cost is the same across the EU, and it's absolutely not.

[pcprogrammer]

But as you yourself describe later, you pay VAT on the difference between your inputs and your outputs. And get a refund if your outputs are worth less than your costs.

True, but that is only when you run a business. If now, I have someone come and do some work for me I have to pay the tax and can't claim it back.

The whole VAT system brings a boatload of work on all ends. You have to fill in the tax forms for it, they have to process them, money has to be transferred, etc.

And that's pretty stupid and adds huge costs, both to dealing with different rates on different things, but also paying people to decide which rate is for which thing. e.g. basic food such as cookies is 0%, but luxury food such as chocolate is 20%. So which is biscuits coated with a layer of chocolate? Does it depend on the thickness of the layer? etc etc, on a million different goods.

Here in New Zealand everything is 15%, no variations, no exceptions. If poor people can't afford basic food, given them money directly, don't muck about with the tax rate on the food.

Yep it sure is in a way. The idea in the NL (EU?) is to make healthy food cheaper, but it fails at that too. Because what is healthy? Potato is a vegetable and somewhat healthy, but now what if it is turned into crisps? Kind of the same as your cookies and chocolate, although I would not consider cookies as basic food. 

[wraper]

But as you yourself describe later, you pay VAT on the difference between your inputs and your outputs. And get a refund if your outputs are worth less than your costs.

True, but that is only when you run a business. If I have someone come and do some work for me I have to pay the tax and can't claim it back.

The thing with VAT is that business claim the VAT paid back in nearly all cases with some rare exceptions. So VAT is actually tax for individual or small non VAT registered business. So only the final (usually individual) buyer actually pays the tax.

[wilfred]

I believe Aliexpress has a warehouse in Australia with, presumably, some of the more popular stuff, as they do also in the USA and EU.

I did not know that. But still I have to wonder just what is "more popular stuff". Recently stuff I bought are nickel strip, a spot welding pen  and a folding "leather" case for a Moto G14 which is hardly a popular phone. They all had Chinese writing on the labels.

I'd be surprised if I accidentally drifted into popular items. No idea what they might be.

[pcprogrammer]

But as you yourself describe later, you pay VAT on the difference between your inputs and your outputs. And get a refund if your outputs are worth less than your costs.

True, but that is only when you run a business. If I have someone come and do some work for me I have to pay the tax and can't claim it back.

The thing with VAT is that business claim the VAT paid back in nearly all cases with some rare exceptions. So VAT is actually tax for individual or small non VAT registered business. So only the final (usually individual) buyer actually pays the tax.

Yes that is what I'm saying. I edited my post to reflect that when I now hire someone, I have to pay the tax. I'm retired and have not had a business since 2012.

Here in France there are also reductions when being a pensioner to stimulate hiring a gardener or so. 20% on top of a workers hourly rate makes it very expensive nowadays.

[jonpaul]

 GST/VATsales tax is   very unfailr an perhaps illegal scheme for governments to steal.

All tax is thieft. Its OUR money not the Governmants!

See Murray Rothbart, Lugwig VonMises, the Federalist Papers, Claudio Grass, Ron Paul

This happens by your  electing socialist/commies to your governmants.

Jon

[tszaboo]

In the EU, they will just slap a ~20 EUR import tax + VAT administration fee to your item. And then VAT to the administration fee. So your 1 EUR item would be ~26 once it gets here.

Only when the shop you are buying from does not handle the VAT themselves. Then the postperson will knock on your door and collect the VAT + administration fee from you.

Aliexpress handles the VAT for you, so no problem there. But that said, the shipping cost are increasing making it less and less interesting to buy stuff from them.

Of course. Only if your seller doesn't handle import tax and VAT. You want DDP incoterms, because somehow doing the same VAT handling is practically free, while in Europe some automated process to send you a link to pay VAT in an email or phone message is 25 EUR.

Don't mix IOSS with DDP, very different things. Not to say you assume clearance process and cost is the same across the EU, and it's absolutely not.

"The most important consideration for DDP terms is that the seller is responsible for clearing the goods through customs in the buyer's country, including both paying the duties and taxes, and obtaining the necessary authorizations and registrations from the authorities in that country."
There is a slight difference in what IOSS is, it's a procedure for the seller to pay the import duty and VAT. DDP is a delivery term that might include IOSS and whatever else to get the product to your door without extra additional cost later. IOSS is not an incoterm.
DDP is an agreement between the seller and buyer on who does what, IOSS is one of the procedure the seller can do.

[wraper]

"The most important consideration for DDP terms is that the seller is responsible for clearing the goods through customs in the buyer's country, including both paying the duties and taxes, and obtaining the necessary authorizations and registrations from the authorities in that country."

DDP is seller paying for particular delivery service that involves customs clearance of the goods. IOSS (EU only but there are similar things in some other countries) means platform or seller collecting VAT for low value items sold to individuals only and paying total collected tax through IOSS once in taxation period. No clearance service involved. Shipped through usual service. DDP from Mouser or Digikey is even more complicated, they basically sell items to their European subsidiaries which then resell them to you. So you don't even get an invoice from US company.

[Siwastaja]

The whole VAT system brings a boatload of work on all ends. You have to fill in the tax forms for it, they have to process them, money has to be transferred, etc.

VAT is one of the simplest and most obvious forms of taxation, and it's pretty similar all over the world (maybe with small implementation detail differences), so I'm quite surprised to see you struggle with the concept!

Of course businesses need to "fill in forms". Bookkeeping is basic requirement for running any kind of business, everywhere, and so is paying taxes. Even I as a small business, and someone who hates paperwork, am totally fine with VAT; VAT is simple. When you sell, you add VAT to the price. Then you deduct the VAT of whatever you had to buy to be able to deliver the product. End result is, you (or more appropriately, your customer) is paying tax for the value increase only. Pretty simple.

[wraper]

When you sell, you add VAT to the price. Then you deduct the VAT of whatever you had to buy to be able to deliver the product. End result is, you (or more appropriately, your customer) is paying tax for the value increase only. Pretty simple.

VAT is just a sales tax with a lot of back and forth happening in intermediate stages. You as individual just pay tax on full value that sort of compounds in intermediate stages, but actually does not really. Naming it VAT makes no sense for final customer as it's anything but, its name only makes sense in the context of back and forth going in between of businesses and TAX agency. It could be just removed in all intermediate stages (it actually is in cross country sales within EU between VAT registered entities) with the same end result. It's just stupid when I have to pay VAT when clearing customs for shipments for my business to just get it reimbursed by tax agency a month later since I almost never sell within Latvia and to individuals.