As companies expand internationally, it’s essential to navigate these areas effectively. In this guide, we’ll explore key things you need to know about tariffs, taxes, customs, and getting the right sanctions legal advice. Whether you’re new to overseas trade or experienced, this article will provide insights to help your business succeed in the global market.
Tariffs and Duties
When sourcing overseas businesses to trade with, it’s important to first gain an understanding of tariffs and duties. In simple terms, a tariff is like a tax imposed on goods when they are either brought into or sent out of a country. It’s a rule that countries use to protect their own industries by controlling trade with other nations.
Different countries can have vastly different tariffs and duty charges which can make a huge difference in the overall cost. Before agreeing to trade with an overseas source, it’s essential that you research the buyer or seller’s duties and tariffs and factor these into your cost calculations.Ultimately, this will tell you whether or not the deal will be worth doing.
Value Added Tax
If you’re a business owner, you probably know about VAT. However, it’s important to remember that the rates might vary in the country you’re targeting. For instance, while the UK’s business VAT rate is 20%, in Poland, it’s 23%. Additionally, you should also be informed about any sales tax rules in your target country. These regulations can impact your taxes and ultimately affect your overall profits.
Employing a Representative
Before you start doing business with another company, many organisations think about employing a local business representative to help seize further sales opportunities. Working with a representative can be helpful for several reasons, including
- Breaking down language barriers
- Familiarising you with local business culture and behaviour which you may not be used to
- Facilitating communication between yourself and the other company – this can be particularly useful if there is a time difference involved
- Helping to make you aware of any pitfalls that you may experience when doing business in that country
Having a representative “on the ground” in the buyer or seller’s country can help to smooth the process significantly and, while this may incur some cost, it will often save time and money for your business in the long run.
If you are physically shipping goods or products to another country, there will be an amount of documentation to be completed for each shipment. Filling in this documentation correctly is incredibly important as any errors may mean that your shipment is delayed or, worse, is returned to you at your own cost.
In most cases, you will need to inform customs of what the goods are, what they are made of, where they are made and how much they cost. Where possible, it’s a good idea to seek advice from a professional when filling in customs forms to ensure that all details are included and are correct.
Trade and Product Agreements
When it comes to trade and products, every country has its own rules that products must follow to be sold there. This might require you to make changes to your product to meet their standards. Before you decide to do business with another country, it’s crucial to know about all the rules that could impact the agreement.
Overseas trading can be extremely lucrative as well as expanding your brand into different territories. It can, however, be very complicated and it’s easy to get caught out if you don’t pay close attention to another country’s rules and regulations. Where possible, find somebody from that country who is able to either work with you or at least explain the ins and outs of trade with that country. If this isn’t viable, visit the country’s government website in order to gain as much information as possible before beginning trade with any company or organisation.
Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained legal professional. Be sure to consult an international trade lawyer if you’re seeking advice on overseas trade. We are not liable for risks or issues associated with using or acting upon the information on this site.