How to collect VAT?
First let me acknowledge that I understand that some here do like DropShippers. I’ve ready many of the comments that show distain to these sellers. I will take the negative comments but I hope that I can find someone that doesn’t care and will take interest in my question and a willingness to help. If anyone knows how to get this in front of people at Amazon I’d be very grateful.
Now the question. I’m a drop shipper I’m located in the U.S. and my distributor is also located in the U.S. I’ve been selling since January and it is my goal once I get the required cash flow to buy pallets and switch to FBA but that is going to take some time.
I’m selling my products in the Canadian Marketplace and there seems to be steady interest in what I’m offering. It wasn’t until recently while going through my books that I noticed my Distributor whom also ships the product has been charging me tax on Canadian orders that ship to Canada. That caused me to look at the Amazon orders a bit more closely and I see that Amazon is charging the customer for the VAT as they should being the Marketplace Tax Collector I expected this. Maybe you see where I’m going with this?
Today as it stands Canada is receive tax collected by the buyer from Amazon, I’m being charged a tax that is going to Canada. Therefor Canada is getting twice the tax from my sales. I have no way to make the buyer responsible for what I’m being charged from the distributor. Now the distributor says that they are required to pay this tax because the product is being shipped by them, to the border and as part of going through the border the tax needs paid. I can understand this, makes sense. But, I’m still out the money that is being charged tax from the distributor.
I could turn off tax collection with Amazon. This would effectively correct the double tax that Canada is collecting but still there is no way for me to recoup what I’m being charged from the distributor.
I could apply for my own GST/HST registration and use my own but then I’m adding an expense of having to have a responsible party in Canada to oversee the operation, then an tax pro to help with the filing and I’m just not ready for that kind of expense. Even if I did this I’m still being charged by the distributor.
Has anyone else been in this position and were you able to come up with a solution?
I appreciate all productive comments.
Thanks
Greg
How to collect VAT?
First let me acknowledge that I understand that some here do like DropShippers. I’ve ready many of the comments that show distain to these sellers. I will take the negative comments but I hope that I can find someone that doesn’t care and will take interest in my question and a willingness to help. If anyone knows how to get this in front of people at Amazon I’d be very grateful.
Now the question. I’m a drop shipper I’m located in the U.S. and my distributor is also located in the U.S. I’ve been selling since January and it is my goal once I get the required cash flow to buy pallets and switch to FBA but that is going to take some time.
I’m selling my products in the Canadian Marketplace and there seems to be steady interest in what I’m offering. It wasn’t until recently while going through my books that I noticed my Distributor whom also ships the product has been charging me tax on Canadian orders that ship to Canada. That caused me to look at the Amazon orders a bit more closely and I see that Amazon is charging the customer for the VAT as they should being the Marketplace Tax Collector I expected this. Maybe you see where I’m going with this?
Today as it stands Canada is receive tax collected by the buyer from Amazon, I’m being charged a tax that is going to Canada. Therefor Canada is getting twice the tax from my sales. I have no way to make the buyer responsible for what I’m being charged from the distributor. Now the distributor says that they are required to pay this tax because the product is being shipped by them, to the border and as part of going through the border the tax needs paid. I can understand this, makes sense. But, I’m still out the money that is being charged tax from the distributor.
I could turn off tax collection with Amazon. This would effectively correct the double tax that Canada is collecting but still there is no way for me to recoup what I’m being charged from the distributor.
I could apply for my own GST/HST registration and use my own but then I’m adding an expense of having to have a responsible party in Canada to oversee the operation, then an tax pro to help with the filing and I’m just not ready for that kind of expense. Even if I did this I’m still being charged by the distributor.
Has anyone else been in this position and were you able to come up with a solution?
I appreciate all productive comments.
Thanks
Greg
0 replies
Seller_7LrAV0m5llaI7
There is nothing wrong with dropshipping here, as long as the sellers follow Amazon's policies and procedures for drop shipping, which you seem to be doing and understand, as you seem to be using a valid brand authorized distributor and have an agreement in place.
The distain comes from other sellers when they dropship from Amazon.com or other online retailers to Canada.
This is correct, the GST/HST needs to be paid as it is imported into the country.
In Canada, we claim back the tax paid on our wholesale costs via Input tax Credits with the Canada Revenue Agency. We take all GST/HST collected, and subtract the taxes from all our business expenses and product costs, and then remit the difference.
You can't turn it off for your customers anymore. The Canadian government requires Amazon charges and remits the taxes on all marketplaces sales now, the difference is if you have a GST/HST number if it is passed on to you to remit or not.
