Thursday, February 01, 2018

Taiwan's Bizarre Import Tax System

Holly Harrington, well known to the expat community here, and someone who has worked hard on behalf of that community and of Taiwan, posted this rant about Taiwan's nutcase import tax system to Facebook:


Ending my Facebook hiatus with a rant. It’s a doozy, and if you live in Taiwan and order things from overseas at all, you’ll want to be paying attention. (希望台灣朋友也會看,雖然有點長但這很重要)

Bottom page: My recent iHerb order. NT $1957 + $355 shipping with DHL. Total: $2312.

Top page: The complicated calculus Jen Chen just walked through on the phone with DHL to understand why DHL was asking me to pay an additional NT $923(!) to get my package delivered when the import tax on the items was only $361.

Long story not so short:
First: Duties are calculated based on original price, not on discount price. So my order value is seen as $2492, and the “loyalty credit” discount I got from iHerb was distributed back into the prices of all 4 items.

THEN, the individual tax categories were applied, at 20 or 30% per item, which added up to $361.

But WAIT, there’s more! Not only do I have to pay $361 in import duties, but also another 5% AFTER import tax on the total order value + tax. So I’m PAYING TAX ON THE TAX.

Lastly, because the tax to be collected exceeds $500, DHL charges a $420 fee for processing, hence a total extra $923 on a handful of personal use products that I have been ordering regularly for close to 2 years.

BUT.... luckily I’m an angry American who has no tolerance for bureaucratic bullshit. And luckily Jen is an aggressive Taiwanese who was willing to keep arguing on my behalf. And luckily someone in DHL has some sense and human decency and agreed to waive the processing fee.

HOWEVER, this is outrageous on so many levels.

1. Because of the new import laws, orders over $2000 NT VALUE (including SHIPPING!) will get stuck in customs, regardless of what was paid. In effect, I’d have had to cut my actual order to around $1500 to receive it without all these extra steps.

2. There’s not only a 進口稅 (variable based on the category of Every Single Item, which good luck figuring out before you order!) but also 營業稅 (that 5%) which is calculated as (ORDER VALUE + 進口稅)*5%. Tax on tax.

3. Because this nonsense is creating an insane amount of extra work for logistics companies like DHL, they have no choice but to charge more fees to recoup their costs. I understand their perspective, and frankly it’s not their fault.

4. Taking the protein bars I ordered as an example (because I eat these all the time and cannot buy this low-sugar brand in Taiwan):
Original price on iHerb: $734
20% tax: $147
5% extra tax: $44
Actual cost: $925? NOPE

Price calculated by arbitrarily adding some of my loyalty discount back in: $857
20% tax: $171
5% extra tax: $51

So I’m paying $346 more than the actual cost of the item I ordered, an effective 47% tax on 12 freaking protein bars. And this is just ONE item in my order.

This protectionism is not helping anyone. It’s hurting consumers. It’s hurting logistics companies. It’s not implemented in any logical way.

Most of all, it’s moving society in the wrong direction, making commerce harder rather than easier.

I’m not against paying taxes. I’m against excessive bureaucracy, lack of transparency in taxation, and laws that create more work for anyone.

You shouldn’t need a PhD in mathematics to figure out how much tax needs to be paid for an item.

Logistics companies shouldn’t need to waste their time sending out declaration forms and explaining tax laws to consumers for ordering what amounts to USD $50 on the internet.

Finally, I think I deserve sainthood or at least an award of some sort for NOT using as many swear words as this nonsense deserves.

(Holly added after I asked if I could post it to my blog):

Sure thing! Although one correction/update which I don’t have time to make at the moment (on the way to 尾牙!) — the tax is also on the shipping fee itself. So the $857 for the protein bars included a portion of the shipping fee. (DHL said it was higher because of the discount but I did the math again after posting this and found the difference exactly matches the shipping fee)

Which is still insane. Paying 20-30% tax on both the item and the shipping added together, then 5% on top of that, then given a $420 surcharge by DHL because the tax was over $500. Glad DHL didn’t push on the surcharge after we pushed back but feel sorry for other folks who pay without questioning.
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Anonymous said...

The problem is not about iHerb. The issue is Taobao. People have been purchasing so much stuff from China through the website that government implements this crazy system to discourage the consumer from purchasing directly China. The government prefers importer who they can tax properly.

The current situation is unlikely to change.

Brodie68 said...

Taiwan - forcing you to breath poisoned air, eat poisoned food and drink poisoned water. A sane person looks for clean outside sources, so that get choked off too. I feel your frustration - it forced me to leave Taiwan with my family last year after 20 years in Taiwan. My sons ‘asthma’ has completely disappeared since moving to Canada. The stress of not being able to trust ANYTHING you puy in your body became too much for me. Good luck to you with your fight.

Anonymous said...

I don't really see the issue here? Exactly same for EU countries and many others. You pay duty on the total invoice value (including shipping) and then VAT on top of that. What a courier charges you to help you service this has not nothing to do with the government. It is just being discussed in EU that the minimum amount will be changed to 0eur so even if you order an items worth one penny you will be levied duty and vat on it.

Anonymous said...

Even with this insanity the price of many products purchased abroad are still cheaper than when purchased locally.

WeAreChange said...

Yup! Just got to keep those orders and shipping costs below 2000 ntd for now. No more online shoe shopping for me...

WWu777 said...

Wow i thought i was the only one going through hell with and DHL Taiwan outrageous import duties! I posted my angry rant in my forum here