Navigating Export Regulations for Cross-Border Sellers in the USA

As a cross-border seller in the USA, understanding export regulations is crucial for sustaining profitable operations. The landscape for small sellers has changed recently, with new rules implemented that significantly alter how they conduct business. Here’s a detailed breakdown of the challenges and solutions that sellers face. 🌍

The Challenge of Import and Export Rights

Previously, small sellers without import and export rights could utilize a process called “buying single customs declaration” for their exports. This method allowed them to get their goods shipped without holding the necessary licenses. However, with the new regulations, this route has become restricted. Now, small sellers must either obtain their own import/export rights or partner with a legitimate customs broker. Failing to adapt could result in risks such as non-compliance with financial regulations and potential involvement in money laundering cases. ⚠️

Importance of Authentic Invoicing

When utilizing the buying single customs declaration method, it was typical for the declaration documents to come from the buyer. Unfortunately, this often led to discrepancies between invoiced amounts and actual transactions. Now, every export must be accompanied by genuine invoices. For small sellers, this poses a significant hurdle; if they cannot provide compliant invoicing, they risk facing severe consequences, including withdrawal of their ability to claim tax refunds. This could further result in their goods being taxed as domestic sales, leading to additional financial burdens like supplementary VAT payments. 🧾

Illustrative Example

Let’s take a closer look at how the process used to work and how it has changed:

Original Process

• Goods were procured from 1688 and the freight forwarder’s address was filled out.
• The freight forwarder used the buying single customs declaration, directly shipping items to the Shopee warehouse.
• With a monthly sales volume of $100,000 and no tax declarations, profits stood around $30,000.

Risk: If discovered utilizing “buying single customs declaration,” sellers would need to repay VAT (10,000 x 13% = $13,000) and could face penalties.

Current Process

• Collaborate with compliant freight forwarders and provide purchasing invoices.
• The freight forwarder files declarations with accurate owner information, applying for tax refunds (e.g., with a refund rate of 13%).
• The monthly sales volume remains $100,000, but compliance costs approximately $5,000 (for fees and taxes), resulting in a profit of around $25,000 without legal risks.

Advantage: Sellers can apply for long-term cross-border e-commerce tax refunds ($100,000 x 13% = $13,000), helping to offset some operational costs. 💡

Conclusion

In summary, while the new regulations may seem daunting, understanding the changes can empower cross-border sellers to navigate these waters effectively. Establishing compliant practices not only protects from legal risks but also provides opportunities for financial advantages through potential tax refunds. As the landscape continues to evolve, staying informed and adaptive will be key to thriving in the international market. 💼✨