Beware! Amazon was fined nearly 40 million yuan for selling a big product, and the investigation is still ongoing...

The crackdown is on the way, and big sales are also affected!

Zebao's subsidiary, a major seller on Amazon, was fined nearly 40 million for failing to fully declare VAT taxes.

Customs crackdown is ongoing. Many freight forwarders have reported that US Customs is conducting strict inspections on under-declarations and that goods from many sellers have been returned. At the same time, Europe's strict inspections have not stopped. Regarding Belgium's inspections and receipt of fines, inspections caused by high-tax products are currently common.

In addition to the problem of under-declaration, the appearance rate of counterfeit brands has been particularly high recently. The new year's "Operation Dragon" is here again, and sellers of counterfeit goods should stop.

Cross-border seller fined nearly 40 million

In recent years, cross-border e-commerce has become more and more compliant. Amazon attaches great importance to tax issues and has therefore blocked many sellers' accounts. Various countries have also begun to conduct tax audits on sellers on their platforms.

Yien.com learned that yesterday, Guangdong Xinghui Precision Manufacturing Co., Ltd. issued an announcement regarding a second-level subsidiary receiving a tax payment notice from the French Directorate-General of Public Finance. The announcement stated that Sunvalley (HK) Limited (hereinafter referred to as: Sunvalley Hong Kong) received a tax payment notice issued by the French Directorate-General of Public Finance.

The announcement stated that Sun Valley Hong Kong was established in Hong Kong in September 2014 and registered a French store on Amazon to sell products. The parent company of Sun Valley Hong Kong is Shenzhen Zebao Innovation Technology Co., Ltd.

Due to the continuous development of Amazon and the rapid increase of its global influence, the French government began to focus on and investigate the tax issues of sellers on the Amazon platform. The French tax department determined that Sun Valley Hong Kong had not fully declared VAT taxes from January 2015 to August 2019, and therefore issued a tax payment notice to Sun Valley Hong Kong, with a total amount of 4,950,891 euros . The overview is as follows ↓

As can be seen from the figure, Sun Valley Hong Kong had to pay back taxes of 2,575,790 euros and was fined 1,930,794 euros from January 2015 to November 2018; from December 2018 to August 2019, it had to pay back taxes of 306,552 euros and was fined 137,755 euros.

Xinghui Precision stated in the announcement that after receiving the above notice from Sun Valley Hong Kong, the company sorted out and self-checked the tax declaration of the French store, and checked the VAT tax listed by the French Public Finance Directorate-General. Due to objections to the amount of the fine , the company formally hired a local third-party professional organization in France in January 2021 to apply to the local tax authorities for VAT tax and exemption of fines. The company will pay the final payment amount in a timely manner after it is determined.

The amount of this payment notice is 4,950,891 euros, equivalent to approximately RMB 38.29 million ( converted based on the RMB midpoint exchange rate in the interbank foreign exchange market on March 17, 2021). The operating income of Sun Valley Hong Kong's French store in 2019 was equivalent to RMB 19.2229 million, accounting for 0.55% of the company's operating income in 2019. The income ratio is small and has little impact on the company's overall performance.

When the company acquired Shenzhen Zebao Innovation Technology Co., Ltd., the parent company of Sun Valley Hong Kong, in a major asset restructuring in 2018, it signed an agreement with 27 counterparties including Sun Caijin. According to this agreement, Xinghui Precision will recover taxes and fines ( approximately 4.6 million euros, the specific amount is subject to the approval of the tax department) before the delivery date of the major asset restructuring target ( December 31, 2018) from the relevant parties after the payment amount is finalized in accordance with the provisions of the "Agreement on Issuing Shares and Paying Cash to Purchase Assets". The company will investigate the responsibilities of the relevant responsible persons and the then-managers in accordance with the law and regulations for the taxes and fines that the company should pay after the delivery date (approximately 350,000 euros, the specific amount is subject to the approval of the tax department).

It can be seen from the announcement that Zebao still needs to pay the taxes and fines owed before the delivery date, and Xinghui Precision will also hold the responsible persons and managers at the time accountable.

Previously, many sellers who sell on European sites said that when it comes to taxes, they try to evade as much as possible. But now it is different. Tax inspections in Europe are so strict. If too much tax evasion has been made before, once it is discovered, the huge taxes and fines will overwhelm the sellers.

If you don’t want to pay taxes and fines, you can only abandon your store. Can you really bear to throw away a store that you have run for so long? I would like to give all sellers a piece of advice: if you want to do business on Amazon for a long time, you must not evade taxes!

Customs inspections are strict! Sellers from the United States, Europe, Japan, etc. should be extra careful

Big sellers also suffer from VAT, and small sellers suffer even more. Although customs' strict inspection of under-declaration is a daily operation, it seems that the customs' crackdown has intensified recently, so that many sellers, especially self-shipping sellers, have no way to express their suffering. This wave of customs crackdowns has also caused many logistics service providers to post reminders!

According to the following notice from a freight forwarder:

Customers who often use express delivery for the first leg, please pay attention ! You must prepay the tariff to prevent the goods from being reviewed by low application. If the goods are forced to be returned by the customs, the customs will no longer give you the opportunity to make up the tariff prepayment !

Another freight forwarder stated that there were issues with the customs review of Amazon goods ownership at the Port of Los Angeles , and recommended that customers use their own BOND for customs clearance .

A freight forwarder told the editor that if a red express bill (non-dedicated double-clearance and tax-inclusive channel) has several pieces of goods shipped to the same Amazon warehouse, it may be regarded as separate shipments by the US government , and you may have to pay taxes regardless of whether the amount exceeds US$800. Those with personal private addresses have to do customs clearance by themselves, and those shipped to Amazon need to find a customs broker because Amazon cannot act as an importer.

In addition to the United States, sellers in the United Kingdom, Germany, Belgium and France in Europe also need to pay special attention to VAT issues in the near future.

A freight forwarder said that except for the UK, European goods are basically cleared in Belgium (a small part is cleared in Poland). As for the inspection and fines received in Belgium, inspections caused by high-tax products are common. The customs has assessed the tax on shoes at 22-25/Kg, and the average tax on textiles (clothes, socks, pants, etc.) is 10-15/Kg. Some logistics companies in the market have refused to accept such products. How to control logistics costs has become the key .

The consequences of under-declaration are self-evident. Take Germany as an example. If under-declaration is found , the sales link will face a tax of 100% of the value of the goods.

In Japan, a freight forwarder said that the Japanese customs is upgrading its inspection of e-commerce goods, and has gradually opened the box to scan the product FNSKU and ASIN barcodes to confirm whether they are real links. Please be sure to submit a real and valid product link. If the link is found to be wrong during the inspection, it may result in high taxes and inspection fees!

Severe crackdown! Counterfeit sellers tremble in fear

The 2021 Operation Longteng has arrived. Customs stated that it will continue to strengthen supervision of infringing goods shipped to North America, Europe, South America, Africa, and countries and regions along the Belt and Road Initiative through freight channels.

In the delivery channels, we will intensify the crackdown on infringements such as "breaking the whole into pieces" and "ant moving", and focus on monitoring high-risk infringing goods such as food, medicine, cigarettes, watches, clothing, shoes and hats, luggage, toys, consumer electronics, personal care products, etc. exported to North America, Europe, Japan and other countries and regions.

The consequences of the investigation include :

1. Confiscation of infringing goods;

2. Mobile economic investigation of high-value goods;

3. The rights holder sues for compensation .

As a result of this wave of severe crackdown, many sellers have already gone bankrupt!

Violating the rules may make you feel good for a while, but you will be punished if you are caught! The editor reminds all sellers to operate in compliance with the rules.

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