We use USPS international to ship products to Canada and UK. Sometimes my packages are returned. We do fill out the necessary forms. Usually when they are returned it has something to do with taxes. Can you anyone tell me how they handle taxes for international packages? I lose alot of money when an order is returned and I have to issue a refund.
I'm in Canada and my best guess is that the item is received in Canada. it gets cleared through customs and handed off to Canada Post to deliver. The customer gets a card in the mailbox telling them to go to the post office to pick up the item. At the post office they are then told they need to pay the duty/tax for the item. I suspect that some of your customers are getting this tax bill and then just simply refusing to pay it so the post office ships it back to you.
There is nothing you can do on your end, there is nothing wrong with the shipping process. The minimum tax varies across the country from 5% to 15% depending on the province. There could also then be customs charges in the form of import duty depending on the product.
In the UK the VAT tax is 20% and the same likely plays out there.
There isnt much you can do other than make sure you have in your shipping info a specific statement that the purchaser is responsible for all duties and taxes imposed by their home country.
If the product is returned I would issue a refund for the purchase price - but not the shipping. And in some cases you end up having to pay for the return to sender shipping so take that into consideration.
Long story short... it's most likely someone who ordered something, thought they paid the full price, only to discover (though it shouldnt be a shock) that they have to pay the equivilant Canadian tax at time of import.
You shipping into Canada do not charge the Canadian taxes - they are entirely the responsability of the customer. The only way around it is that items can be marked as "gift" as the reason for export - but gifts need to be below a certain dollar value, and all you are then doing is comitting canadian tax fraud.
I have the odd UK customer who bitches about this exact issue - they complain that I won't mark it as a gift because they don't want to pay the 20% VAT... They attempt to use that against me and threaten to not order. I just shoot it back at them - if they walk to the corner store in the UK.... they pay VAT. I'm not the one collecting the VAT so I have nothing to gain, its the UK government charging you the taxes of your own country. I ship overseas using DHL - they don't even give me the option to mark a shipment as a gift because they arent stupid and they don't want to be responsible for facilitating tax evasion in a country they operate in.
Here is what I do though... I don't ship a receipt with the goods - rather I ship a packing slip without any prices. I then value the shipment for my overseas customers at my cost price. Otherwise I risk my shipping insurance. If I ship something retail $100 technically I can only insure it for my cost price say $50. So I'll value the goods at $50 for the customer. I can't however insure it for $50 and value it at $0 without it raising red flags. Declaring it at a lower value - the replacement value for me if the package was lost for instance - can reduce (but not eliminate) the tax bill on the receiving end - though is still facilitating tax evasion.
This is EXACTLY what I was looking for. Thank you so much for taking the time to help a fellow human being. You are truly a humanitarian. I feel obligated to type more, but the only thing that comes to mind to say is thank you. May you and your family have a very happy holidays!
Adding over the conversation, i would like to tell a few points using which you can take better decisions in preventing such refunds.
When it comes to paying taxes & duties, it is always better to incur the cost of duties by yourself. If you can do that, that would be a huge help to your customers. Now, the point comes, if your pockets are not full, how can you do that. There are indeed ways on how you can do that.
1. First you can study your shipments and then see from where are the refunds happening? which country?
2. You can make a list and check the sales to refunds ratio for that country and compare them with other countries sales to refund ratios.
3. With this ratio, you should come to some form of conclusion that for which country you need to put more efforts.
4. Use an app for shipping that can allow you to make the payment for duties & taxes instead of making the customer pay. For example, having the Multi Carrier Shipping label app is a good choice for this.
5. Then, you can bear the cost of taxes for the country with lowest sales to refunds ratio. This expense can be adjusted for other countries by creating price adjustments in the app. You may to do some hit and trial to find the best combination, but I am sure this should work out.
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