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Love online shopping? Here are 2 things to know about import taxes and how to avoid paying them

If you are an online shopping expert, you know that no physical boundaries can limit our cyber procurement prowess!

But before you go trigger happy with your online purchase, here is something you need to understand about import tax/custom duties.

Don't you just love taxes?

What is import tax?

It is defined as by investopedia as “tax collected on imports and some exports by the customs authorities of a country. It is usually based on the value of the goods that are imported. Depending on the context, import duty may also be referred to as customs duty, tariff, import tax or import tariff.”

TLDR? It basically means any product that is brought into a country from abroad is subjected to tax.

So... Who pays for these taxes?

Most business pass the cost of tax on to the customers, as these taxes can be a hefty sum. Be on the lookout for these sneaky import taxes that are hiding in the checkout pages.

Here is an example of import tax NOT INCLUDED in the shipping cost.

Upon reaching the customs, your shipment will be held until the import taxes are paid. So be very careful during your (self-prescribed) retail therapy!

Why do we have to pay import tax?

Import taxes serves to limit the attractiveness of overseas products and services, and help encourage the consumption of local produce/business. The tax collected also helps generate revenue for the Government.

Saving the best for last. How do I avoid paying import tax?

Firstly, you need to find out what is the import tax threshold of your country.

Import tax threshold is a limit where all imports exceeding the limit is subjected to import tax. Take Singapore for example. Our import tax threshold limit is SGD$400. So any imports exceeding SGD$400 will be subjected to taxes.

To avoid paying import tax, simply ensure the value of your cart is below the import tax threshold of your country.

Alternatively, you can arrange for 2 separate shipment, so the value of each shipment is smaller.

Every Penny Counts!

So go ahead! Shop till your heart’s content. Or, at least until the threshold limit tells you so!

Disclaimer: This post serves to spread awareness of taxes imposed on imports. Countries have their own legislation. Please consult your local tax expert or legal representatives.

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