First, VAT is reported quarterly
In the UK, there is no annual audit for each VAT tax number, but quarterly VAT returns, settlement refunds (import VAT) and taxes (sales tax VAT) are required for each quarter for the HMRC, accounting for The actual VAT (value added tax) to be paid. Even without sales, but also need to do a quarterly tax returns.
It is worth reminding that the “quarterly” mentioned above is not calculated on a natural quarter basis but rather on the seller’s VAT registration time, which is three months from the date of registration and the fourth Months, the seller needs to make the first quarter VAT declaration, and so on.
Second, the calculation of VAT
- There are three types of VAT rates in the United Kingdom:
1) 20% standard tax rate (for most goods and services)
2) 5% low tax rate (for household electricity, gasoline, etc.)
3) 0% tax rate (for very few cases)
The tax rates are different for different categories of products, but for Chinese sellers at Amazon UK, the vast majority of products are calculated at the 20% tax rate.
Know the tax rate, the seller will be more concerned about, in the end I need to pay how much VAT (VAT)? Looking down, there are formulas.
1) IMPORT VAT = (Declared Value + Freight + Import Tariff) * VAT Rate (20%)
Import tariffs = declared value of X commodity tax rate (different products, different tax rates)
2) SALES VAT = final selling price / 6
* Final selling price: refers to the seller will cost of goods, promotion costs, customs duties, value added tax, profits and other costs added to the final price.
3) Actually pay VAT = SALES VAT – Import VAT (IMPORT VAT)
Third, for example:
A section of shoes sent to the United Kingdom, the number of 200 pairs, the declared value of 20 pounds / pair. Well, the total declared value of these shoes is 4,000 pounds, the first journey of shipping a total of 500 pounds, shoes tax rate of 10%. The final sale price in Amazon is £ 100 / pair. So, how many VAT (value added tax) does the merchant actually need to pay?
solution:
1) import VAT calculation:
Tariff = Declared Value X Product Tax Rate
= 4000 * 10%
= 400 pounds
IMPORT VAT = (Declared Value + Freight + Tariff) X 20%
= (4000 + 500 + 400) X 20%
= 980 pounds
* When declaring VAT, 400 pounds of the customs duty already paid can not be refunded or deducted; import VAT of 980 pounds is returned during the quarterly declaration or used to deduct sales VAT.
2) sales VAT calculation:
If these shoes in the season online sales, the final sales price of 100 pounds / double, the actual sales may occur the following situations:
1) The number of shoes sold is 0. That is, sales of 0, sales VAT is 0, the seller can get a refund (import VAT) 980 pounds.
2) All 200 pairs of shoes sold. Ie £ 20,000 for sales, 20,000 / 6 = VAT for sales 3333.3, VAT (value added tax) 3333.3-980 = £ 2353.3
3) Shoes sold only part, such as half, that is, 100 pairs, then sales of 10000 pounds, the sales value added tax 10000/6 = 1666.6 pounds, VAT (VAT) to 1666.6-980 = 686.6 pounds.
4) if the shoes sold only 50 pairs, the sales value added tax at this time is 50 * 100/6 = 833.3, at this time, the sales value added tax is lower than import value added tax £ 980, VAT (value added tax) payable at this time is 833.3 -980 = -146.7 pounds. In other words, at this point, you will be returned £ 146.7 after VAT deduction.
Generally speaking, when your import VAT is greater than the sales VAT, you will get a tax rebate; otherwise, you will have to pay a deductible sales tax.
