How does it work? I live in Canada. I would like to dropship some items from China to customers in Canada, but I am not sure how customs work. By law, I have to declare what is dropshipped to my customers in Canada, but how do I do that? How do I pay the customs so the customer does not get hit with them, as I want it to be hassle free for my customers. Any help or insight would be greatly appreciated. The products themselves are not very expensive. They would retail in Canada for about $40 each.
Customs and Dropshipping
- Thread starter 5vesGood
- Start date
101Wholesale
BANNED
- Dec 24, 2012
- 12
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i can do wholesale but not dropship, pm me your skype if you are interested
burnett4congress
Regular Member
- Nov 17, 2011
- 400
- 167
Typically the firm sending the shipment would make all the declarations on the package.
If you are doing a container full of items at a time, you'll probably want to work with a customs broker.
If you are doing a container full of items at a time, you'll probably want to work with a customs broker.
I do not have pm capabilities.
They do declare the package and what it is worth, but they don't pay the customs in Canada.
Here we go - again :
The shipper will attach a CN22 form to the package. Since they are shipping a single item with a low value in a ( i assume now ) fairly small package, the most likely scenario is that the package will be delivered to the customer in Canada without any customs problems or fees / taxes to be paid ( check the threshold for value before proper declaration and taxability becomes an issue .
You can not do any declaration nor can you pay taxes on any of those shipments - you are not the congsignee. The shipper can not pay any taxes - they are in China - how could they do it ?
If customs decides that taxes need to be paid - they have to be paid by the person who the package is addressed to.
This is pretty much the only advantage of having something from China drop shipped - if you buy in bulk, you will need to do the proper declarations as Importer, pay all the taxes and fees, get a broker etc. And you will also have the product liability as an importer whereas in the drop shipping method you do not even appear ( to customs ) as the seller or importer of said items.
The shipper will attach a CN22 form to the package. Since they are shipping a single item with a low value in a ( i assume now ) fairly small package, the most likely scenario is that the package will be delivered to the customer in Canada without any customs problems or fees / taxes to be paid ( check the threshold for value before proper declaration and taxability becomes an issue .
You can not do any declaration nor can you pay taxes on any of those shipments - you are not the congsignee. The shipper can not pay any taxes - they are in China - how could they do it ?
If customs decides that taxes need to be paid - they have to be paid by the person who the package is addressed to.
This is pretty much the only advantage of having something from China drop shipped - if you buy in bulk, you will need to do the proper declarations as Importer, pay all the taxes and fees, get a broker etc. And you will also have the product liability as an importer whereas in the drop shipping method you do not even appear ( to customs ) as the seller or importer of said items.
So do I charge taxes to my customer then? I do have to pay taxes at the end of the year if my sales are over $30,000.00, however, I do want to pay my taxes on any and all sales below that threshold as well, so I can take advantage of it as well.
Also, according to the CRA website, it says on there that even if I use dropshipping, that customs have to be paid (not specified price tag) as I am a registered business.
Am I not understanding something properly? ... probably.
Sender / shipper in China - consignee someone other than you - impossible for you to pay the taxes/duties on that particular shipment. Also impossible for the Chinese sender to pay the taxes. The only person who could pay the taxes / duties on the shipment is the recipient.
But if the shipment's value is below the allowance for free import ( diff.Country, diff. amount ) no import duties or taxes will be assessed.
Now, that got nothing to do with the taxes you will have to pay as as business entity on the revenue you have created for selling those items.
Example:
You list an item worth 20 bucks on ebay Canada. You sell it to another Canadian. The buyer pays you and now you have created revenue. But you do not have the item - i do coz i am your Chinese dropper. I ship now this item to your buyer. And i don't give a flying f**k about the taxes and / or duties the Canadian Customs will / could /may / or may not assess. You can not "collect" any duties or import taxes on that shipment either from your customers - coz you simply would not know if any are assessed. Collecting sales tax for the item at the time of sale is a whole different ball of wax.
See what i am getting at ?
So, you want to pay the taxes for the items you never received. I guess you could - at the end of the year - add up all the value of any and all shipments that were send from China to your buyers and declare it as a whole to your customs. How that would work in detail - i have no clue. So best would be to contact your customs and ask this specific question.
Usually every good that is imported is taxed ( in terms of import duties ) with a different percentage. Some goods are duty free, some others have quite high duties - upward of 10%
Do not mistake VAT for duties and import taxes. Also, some Countries take the VAT on the shipping fees as well - i dunno about Canada but most European Countries do.
At the end it is not in your control if your buyer needs to pay anything before he / she gets the package.
But if the shipment's value is below the allowance for free import ( diff.Country, diff. amount ) no import duties or taxes will be assessed.
Now, that got nothing to do with the taxes you will have to pay as as business entity on the revenue you have created for selling those items.
Example:
You list an item worth 20 bucks on ebay Canada. You sell it to another Canadian. The buyer pays you and now you have created revenue. But you do not have the item - i do coz i am your Chinese dropper. I ship now this item to your buyer. And i don't give a flying f**k about the taxes and / or duties the Canadian Customs will / could /may / or may not assess. You can not "collect" any duties or import taxes on that shipment either from your customers - coz you simply would not know if any are assessed. Collecting sales tax for the item at the time of sale is a whole different ball of wax.
See what i am getting at ?
So, you want to pay the taxes for the items you never received. I guess you could - at the end of the year - add up all the value of any and all shipments that were send from China to your buyers and declare it as a whole to your customs. How that would work in detail - i have no clue. So best would be to contact your customs and ask this specific question.
Usually every good that is imported is taxed ( in terms of import duties ) with a different percentage. Some goods are duty free, some others have quite high duties - upward of 10%
Do not mistake VAT for duties and import taxes. Also, some Countries take the VAT on the shipping fees as well - i dunno about Canada but most European Countries do.
At the end it is not in your control if your buyer needs to pay anything before he / she gets the package.
Yes, we all did at some point. Declaring as gift or sample without any value or low value is fine but that is not what the OP is getting at:
So do I charge taxes to my customer then? I do have to pay taxes at the end of the year if my sales are over $30,000.00, however, I do want to pay my taxes on any and all sales below that threshold as well, so I can take advantage of it as well.
What he wants is to have something to leverage against his sales income. Since he is not importing these goods he will have nothing to show in terms of invoices / custom forms to show to the taxman.
In a "normal" scenario it would work like this:
Company A is importing goods. A pays for all duties, import taxes and assumes responsibility for product liability and what not.
A sells these goods now and collects 9 if applicable ) sales tax.
When tax time comes A will use the value of the goods ( cost )+ duties /import fees and shipping as expenses.
Now in this case A is using drop shipping from China ( or any other Country, doesn't matter ) to the buyer. So A is NOT importing anything and has basically nothing to show the taxman. Sure, A can ask the supplier to send monthly invoices for all the goods shipped out.
I for sure do not want to be your CPA - what a mess that would be.
Just enjoy the benefit of drop shipping in terms not to be responsible for duties and fees and product liability. You will have many other things to worry about when using a drop shipping service from China....