Why doesn't Shopee require VAT? Is it necessary to collect taxes?

Transactions on the Shopee platform basically involve cross-border transactions, so there will be tax issues involved. However, there is one difference from other cross-border e-commerce platforms, that is, VAT is not required. So some seller friends will ask, why doesn’t Shopee require VAT?

Currently, only Taiwan and Indonesia sites have tax policies for Shopee sales, and other sites do not have corresponding tax policies. For example, Shopee Indonesia imposes a 10% tax on packages below US$3; packages above US$3 are subject to a 17.5%-50% tax depending on the category.

But there is no need to worry. The tariffs are paid by the buyers and the sellers do not have to bear the costs. After the product pricing is completed, the system will automatically add the tariffs to the selling price.

Indonesia’s import duties on goods:

The policy clearly states that for goods below US$3, the platform will charge a 10% tax, and for goods above US$3, a tax of 17%-50% will be levied depending on the category of the product.

The implementation of this policy actually means that the operating costs of goods sold to Indonesia will increase in the future. Sellers will definitely have to recalculate their operations.

What is the VAT number for the Polish market?

VAT (Value-Added Tax) is a tax system in the European Union, similar to my country's VAT, which refers to the tax on the added value of goods during the sales and circulation process. The European Union is special because the European Union consists of 27 countries (the United Kingdom has already left the EU), and each country has a different VAT rate.

Polish Value Added Tax (VAT) = standard VAT rate 23% × (CIF price + import duties + deferred taxes). Zero VAT applies to the supply of certain ships and aircraft, services related to air and sea transport, international transport services, and services related to the import and export of goods.

Note: Buyers need to pay 23% value-added tax (VAT), but this tax rate will be added to the final selling price of the product by the platform system and will not affect the seller's backend pricing.

Someone asked whether Shopee needs to pay taxes for its business license?

If it is a small-scale enterprise and it only issues ordinary invoices, it does not need to pay value-added tax if the amount is less than 300,000 yuan in a quarter. If it exceeds this amount, it needs to pay it. If it issues a special invoice, it needs to pay tax. If the enterprise is in a loss-making state, it does not need to pay corporate income tax, but it needs to pay it if it is profitable.

If it is a general taxpayer enterprise, the calculation will be based on the issued invoices and cost invoices, as well as the declared wages and reimbursement invoices for the company's daily expenses, to see whether it is in a loss or profit state. If it is in a loss, it does not need to pay, but if it is in a profit, it needs to.

VAT is a post-sale value-added tax generally levied by EU countries, which is equivalent to the profit tax on the sales price of goods. If a cross-border e-commerce seller is doing business in the European market, he needs to register a local VAT tax number. After applying for the tax number, the seller needs to file a tax return based on the actual sales amount and the time specified by law. General taxpayers: VAT = output tax (sales tax) - input tax (import tax); small-scale taxpayers: VAT = sales * interest rate.

VAT is a problem that cross-border e-commerce will inevitably encounter. VAT refers to value-added tax. Different countries have different VAT collection conditions and collection rates. The current tax rate is about 20%.

Recommended reading:

What are the best-selling products on Shopee Thailand?

How long does it take to place orders after opening a Shopee store? How to place orders quickly?

What is the main channel for connecting with Shopee managers? When will the connection take place?