Alibaba

[078sarahj]

Hi,

I want to order some items from Alibaba to start my business, I have been invoiced on Alibaba and they have added on 20 percent VAT, I understand when my items arrive in the UK I have to pay VAT and duties as I am not VAT registered, but surely I don’t pay twice? Please help! I’ve asked both the suppliers and they don’t seem to understand.

Thanks,
Sarah

 

[Solve My Problem]

The new rules mean anyone selling into the UK has to be VAT registered

You will not pay VAT again however you may have to pay import duty and the fees for this.

Darren

 

[DefinitelyMaybeUK]

The new rules mean anyone selling into the UK has to be VAT registered

That's only if the order is under 135 GBP though

There's a related thread here which casts doubt on the validity of Alibaba VAT payments:

Import VAT, where to find

Hi Guys, I made a tranaction for an item on alibaba for 55usd. The item requires the payment of GB VAT on import but I don't know where this is listed. I checked the supplier's invoice and there is no mention of VAT. Are the delivery company going to give me another invoice ? The transaction on...

www.ukbusinessforums.co.uk

 

[078sarahj]

The new rules mean anyone selling into the UK has to be VAT registered

You will not pay VAT again however you may have to pay import duty and the fees for this.

Darren

Thanks for your response Darren, so the 20 percent VAT I pay for the products when I pay through Alibaba will be the only VAT I have to pay? If when they arrive in the UK and the shipping company ask me to pay the VAT i assume I just need to show them the Alibaba invoice which proves I have paid the VAT and there shouldn’t be any issues?
Have the rules changed then? I remember ordering a larger order a few years ago and being shipped by sea and having to pay tax and duties once arrived not when I made the payment to Alibaba. Thank you for your help!
Sarah

 

[MOIC]

My advice is not to pay any VAT to an Alibaba supplier based in China.

The only VAT you'll need to pay is when it arrives in the UK.

Unless it's being delivered DDP (Delivered Duty Paid) in which case you need to ensure you get all the required paperwork.

 

[078sarahj]

Hi, I believe a couple of the items are DDP, what paperwork do I need to ask for?
If they are sending DDP but have agreed to leave the VAT of is this Ok?
Also if my goods are worth under £135 do I not need to pay tax? Or is that £135 including the postage?
Thank you for your time.
Sarah

 

[fisicx]

As an aside, be very wary of anything you buy from Alibaba. What you order may be very different to what arrives.

 

[078sarahj]

But isn’t that what Alibaba is there for if there is issues with the quality or not as described then I am protected?

 

[078sarahj]

As an aside, be very wary of anything you buy from Alibaba. What you order may be very different to what arrives.

Isn’t that what Alibaba is there for if there is issues with the quality or not as described then I am protected?

 

[078sarahj]

My advice is not to pay any VAT to an Alibaba supplier based in China.

The only VAT you'll need to pay is when it arrives in the UK.

Unless it's being delivered DDP (Delivered Duty Paid) in which case you need to ensure you get all the required paperwork.

Hi, I believe a couple of the items are DDP, what paperwork do I need to ask for?
If they are sending DDP but have agreed to leave the VAT of is this Ok?
Also if my goods are worth under £135 do I not need to pay tax? Or is that £135 including the postage?
Thank you for your time.
Sarah

 

[fisicx]

Isn’t that what Alibaba is there for if there is issues with the quality or not as described then I am protected?

In theory yes, but actually getting your money back is a whole different matter. This is why buyers use agents to manage the order for you. Agents like @MyOfficeInChina

 

[078sarahj]

In theory yes, but actually getting your money back is a whole different matter. This is why buyers use agents to manage the order for you. Agents like @MyOfficeInChina

Please can you tell me what an agent does? My orders are pretty small 100pcs to 150pcs not very expensive items. Thank you.

 

[fisicx]

Please can you tell me what an agent does? My orders are pretty small 100pcs to 150pcs not very expensive items. Thank you.

They can check the supplier, make sure the order is complete, sort out the paperwork, arrange for delivery to your door and hold payment in escrow.

Or you take a chance and hope the order arrives and is correct. If you pay using a company credit card you can get your money back but this could prevent further orders.

 

[japancool]

Even if the first order arrives and is correct, you may find that subsequent orders are not - the items may be wrong, poor quality, or just defective.

Remember who Ali Baba was most famously associated with!

 

[078sarahj]

Even if the first order arrives and is correct, you may find that subsequent orders are not - the items may be wrong, poor quality, or just defective.

Remember who Ali Baba was most famously associated with!

Who?

 

[fisicx]

Who?

Alibaba and the 40 thieves.

 

[MBE2017]

Please can you tell me what an agent does? My orders are pretty small 100pcs to 150pcs not very expensive items. Thank you.

An agent primarily fills in your lack of knowledge. They help source, negotiate, check goods, orders, quality, paperwork, build relationships and can advise you on building a brand, not just being yet another importer. Most importantly they understand the language and business practices and customs.

Now for small amounts to dip your toe into the water you might take the chance, if you decide you want to spend real larger amounts I would recommend using an agent, there is a lot to learn. I used to import a lot, but I was lucky, dealing in low cost but very high mark up items, I could afford mistakes. Luckily I never had a problem, apart from a handful of bad quality items, I just threw them in the bin and got a credit issued, you might not be so lucky.

Talk to MOIC above, I have no affiliation to him, but he appears to have a good reputation and should be of great help to you.

 

[MOIC]

what paperwork do I need to ask for?

Paperwork that the VAT has been paid to HMRC and that you can include it in your books (irrespective of whether you're registered for VAT or not). It should include their GB Vat Number and UK address.

 

[MOIC]

Please can you tell me what an agent does? My orders are pretty small 100pcs to 150pcs not very expensive items. Thank you.

Given the value of your orders, it won't be economical to use our services.

However, feel free to ask any questions as I offer free advice on all questions related to buying & importing from China.

 

[078sarahj]

Given the value of your orders, it won't be economical to use our services.

However, feel free to ask any questions as I offer free advice on all questions related to buying & importing from China.

Thank you I really appreciate your comments.
So a couple of my suppliers have taken the VAT off when I have argued this but others are adamant this cannot be done as it’s Alibaba who adds it on. So now I am very confused as when I go to pay for some items on Alibaba there is no VAT whereas other items there is?

 

[MOIC]

Thank you I really appreciate your comments.
So a couple of my suppliers have taken the VAT off when I have argued this but others are adamant this cannot be done as it’s Alibaba who adds it on. So now I am very confused as when I go to pay for some items on Alibaba there is no VAT whereas other items there is?

Ask the suppliers that want to charge you UK VAT to issue you the Pro forma. If it doesn't have a UK VAT number and a UK address, ask them why? If they don't give you a satisfactory answer, then look for an alternative supplier. There are many on Alibaba, some are useless, many are one man bands who just sell on, some are good. You need to sort the wheat from the chaff.

 

[078sarahj]

Ask the suppliers that want to charge you UK VAT to issued you the Pro forma. If it doesn't have a UK VAT number and a UK address, ask them why? If they don't give you a satisfactory answer, then look for an alternative supplier. There are many on Alibaba, some are useless, many are one man bands who just sell on, some are good. You need to sort the wheat from the chaff.

So it is there choice whether to add VAT? It isn’t by law that Alibaba are now adding on to the invoice?

 

[MOIC]

So it is there choice whether to add VAT? It isn’t by law that Alibaba are now adding on to the invoice?

They shouldn't be charging any VAT from China without a UK VAT number AND UK address. Full stop.

 

[078sarahj]

They shouldn't be charging any VAT from China without a UK VAT number AND UK address. Full stop.

Thank you!

 

[japancool]

The law, as I understand it, means that:

Alibaba, being a marketplace, should be UK VAT registered.
Therefore, they should be charging UK VAT when and if the total order value, inc. shipping, is £135 or less, and the invoice and amount you pay should reflect that.
If the order is more than £135, the invoice should not include UK VAT, and the VAT and customs will be collected by HMRC when the item arrives in the UK.

That's what SHOULD be happening.

In reality, who knows?

 

[MOIC]

If VAT is charged by Alibaba for sales up to £135, who does the VAT go to?

 

[japancool]

If VAT is charged by Alibaba for sales up to £135, who does the VAT go to?

They should be remitting to HMRC.

In theory.

 

[MOIC]

They should be remitting to HMRC.

In theory.

Chinese are good at theorising and masters of doing what only suits them!

 

[PaulWyn]

Ask the suppliers that want to charge you UK VAT to issue you the Pro forma. If it doesn't have a UK VAT number and a UK address, ask them why? If they don't give you a satisfactory answer, then look for an alternative supplier. There are many on Alibaba, some are useless, many are one man bands who just sell on, some are good. You need to sort the wheat from the chaff.

This is doing my head in also! I've (eventually!) placed 5 orders with different Alibaba suppliers via Trade Assurance. The TA orders are all on DDP Trade Terms (because I'd prefer to avoid all the hassle of handling the Customs & VAT clearance myself). However, one of them shows a separate tax charge added on top of the TA order payment amount. The rest don't have any such tax to pay in the TA order (and only finally, after exchanging hundreds of message and going round in circles about it all).

So, you are saying this odd one out is because that supplier is not VAT Registered in the UK, whilst the other 4 are? Sure, I'll take your advice and ask that supplier tomorrow for a PI and see whether they show any UK VAT registration info on it. I'm not hopeful of clarifying what's going on though, because none of the other suppliers, whose TA orders are finally now not adding on any tax, had any VAT registration info on their PIs either.

On Alibaba, I only want to source the components I need, order & pay for them, then get the hell out of there. However, it seems ≈90% of the countless messages I have to exchange on there are about all this shipping, Incoterms, Customs & VAT nonsense & confusion. Aaaarrrrrgggghhhh!!!! Or, is it just me??

Does ANYBODY *really* know the full ins & outs of all this? If so, please can you point me to them? Pleeeeease!!!

It's like this whole DDP/VAT stuff is plain mental, along with all the other Incoterms & shipping confusion. It's clear as mud! It must be driving countless buyers and Alibaba suppliers nuts. However much I've Googled about the subject there are numerous different fuzzy answers to the same questions.

Many of Alibaba's suppliers don't seem to know or understand how it all works either (which doesn't surprise me - I'm damned if I do!). Also, 'expert' blogs and forum posts all over the net either pretend to know, with vague answers, and/or they just contradict each other, often scimping on any precise details. Freight Forwarders websites are little more help either.

Wherever I look, it seems impossible to pin down a full & clear answer to a straightforward question like "does DDP shipping include Customs Duty, clearance fees and VAT?"

It's bad enough having to wade through the language translation problems, haggling prices, ensuring you don't get scammed etc etc, but that's all nothing compared to working out the shipping details!

Rant over... for now ;-)

 

[MBE2017]

Makes people see the value in of using an agent, PaulWyn.

You cannot expect people to offer their hard earned work and experience for free when it is their trade. MOIC is a regular on the forum and an agent and answers many questions freely and fairly.

For people looking to import small amounts, maybe consider buying locally, or just take the risk if you feel it worthwhile. It does come down to economies of scale at the end of the day. When I used to import, I just spent a few days researching and only risked a couple of grand, but things are a lot more complicated now.

One tip, never trust too much in online sites, do your own due diligence. It is not that hard to send emails and make some phone calls, or even check out the Gov sites abroad as to the true validity of someone claiming to be a multi national company.

 

[PaulWyn]

Makes people see the value in of using an agent, PaulWyn.

You cannot expect people to offer their hard earned work and experience for free when it is their trade. MOIC is a regular on the forum and an agent and answers many questions freely and fairly.

For people looking to import small amounts, maybe consider buying locally, or just take the risk if you feel it worthwhile. It does come down to economies of scale at the end of the day. When I used to import, I just spent a few days researching and only risked a couple of grand, but things are a lot more complicated now.

One tip, never trust too much in online sites, do your own due diligence. It is not that hard to send emails and make some phone calls, or even check out the Gov sites abroad as to the true validity of someone claiming to be a multi national company.

I take your points MBE, many thanks for giving them. However, just as for many newbies, it seems procuring an agent doesn't seem viable for the smaller scale businesses. We choose to try finding out what we can for free instead, if only because we have to, in order to keep our costs low.

With hindsight, I perhaps now wish I'd taken that route. Albeit at the extra initial financial expense, I'd possibly have saved myself from spending lots of my time and stress by doing so, and perhaps would work out cheaper in the long run too, small business or not.

I naively believed at one point that enlisting a freight forwarder should help, by leaving it to the 'experts'. But no, they either contradict each other or just confuse me even more when I ask them about their different shipping options. And that's even though I'm prepared to pay them for their services.

For instance, some say DDP includes VAT, others say it doesn't, just the Customs duty & clearance. I'm not asking them to freely give away all their trade secrets to me, but merely to answer what should be simple questions with simple answers. I am a customer for them after all.

There are definitely some knowledgeable, trustworthy people out there, sure, but sorting the wheat from the chaff seems much easier said than done. Yes, I simply have to take some risks here & there, which is what I've already been doing - and no-one ever said that's a walk in the park, that's business.

For now, I think I need yet another long sleep and some fresh thinking!

 

[MOIC]

Yes, I simply have to take some risks here & there, which is what I've already been doing

Taking risks is the last thing you do with an Alibaba supplier, or relying on what they say re shipping.

 

[Bob Morgan]

. . . Alibaba and his 40 Thieves

 

[MBE2017]

I take your points MBE, many thanks for giving them. However, just as for many newbies, it seems procuring an agent doesn't seem viable for the smaller scale businesses. We choose to try finding out what we can for free instead, if only because we have to, in order to keep our costs low.

Understandable, I had the same mindset when I started importing and the risks were worth it at the time, to myself.

Best of luck.

 

[MOIC]

We choose to try finding out what we can for free instead, if only because we have to, in order to keep our costs low.

!'ll be happy to answer your main queries regarding problems you may have for buying from Alibaba.

We don't charge for advice!