International taxes can be complicated and also hefty if you’re considering international trade.
The taxes you should be aware of are taxes on your profits, VAT, custom duties and any taxes that are local to the overseas country in question. It is advisable to seek professional assistance from a chartered accountant so you can be sure that you are paying the right amount and handling everything above board.
First and foremost, let’s start by taking a look at the international tax on profits. You will pay tax on your profits in the normal way you already do if you are simply importing goods so that you can sell them in the United Kingdom. You should not experience any international tax complications, although it is a good idea to check with your accountant to be sure. Head to www.qaccounting.com to find an expert if you have not got an accountant yet.
However, if you have an international presence, for example, if you establish a local operation in another country to help with your exports, then you will find that you become liable to international taxes. This highlights why international tax planning is so important because you will need to separate your international profits from your UK profits, as both will be subject to different levels of tax. Needless to say, this can be extremely confusing, and mistakes are expensive, so search for the best-fixed fee accounting services for assistance.
You also need to take VAT and customs duty into consideration. This is largely dependant on who you are trading with, i.e. whether it is a country in the EU or one that is based outside of the EU. Let’s start with EU countries. In order to avoid paying any additional customs duty or VAT, you can ask your supplier to zero-rate the goods for VAT. This means that you still make a VAT declaration, but you don’t have to pay this. Of course, you can only do this if you are VAT registered.
It is worth noting that there is excise duty payable on some goods, including tobacco and alcohol. If you are exporting to the EU, you can also participate in the zero-rate option that has just been mentioned. If not, you should refer to the UK VAT rates that are in place unless you supply digital services, in which case you need to charge the VAT rate in the consumer’s country.
If you are dealing with countries outside of the EU and you are importing goods, you will pay the UK’s normal VAT rate. However, there may be excise duties and customs duty to pay as well; this all depends on where the goods are going. When it comes to exporting goods to countries outside the EU you can zero-rate these sales usually, however, you may have to pay international taxes in the country in question.
Hopefully, you now have a better understanding of the different taxes that are payable when it comes to international taxation. The best thing to do is use the services of a quality chartered accountant to ensure no mistakes are made.