How are Americans supposed to pay the 10% tariff on N3V sales?

[johnwhelan]

Just idle curiosity.

Thanks John

 

[stagecoach]

How would you tax a download or class it as an import? You don't pay postage and downloads don't go through customs.

 

[wreeder]

They don't. Tariffs in the United States are collected at the port of entry. Obviously digital goods and services are not effected. Now the EU attempts to collects their tariffs or taxes for digital goods and services directly from companies like Apple and Google. They claim these companies owe the EU billions of Euros because a person in the EU used their services and therefore they owe VAT on the monthly payments.

I live in a state where the government tries to collect 4% tax on electronic purchases on the State income tax form. They ask the total of all your Internet purchases where sales tax was not collected and applies the 4% to that amount. Most big sellers like Amazon collects the tax at the time of purchase and sends the State the money.

Yes, I do report the N3V purchases on my state taxes. It really doesn't amount to much. Four percent of $70 is $2.80.

 

[hiawathamr]

>How are Americans supposed to pay the 10% tariff on N3V sales?
Well you could buy it from Steam and call it a day as they do collect sales tax at the time of purchase but digital goods aren't subject to tariffs but are subject to sales tax.

Cheers

 

[norfolksouthern37]

Thank you for explaining this. It is quite apparent recently that not many people understand what tariffs are and what they do.

 

[johnwhelan]

Thank you for explaining this. It is quite apparent recently that not many people understand what tariffs are and what they do.

Interesting, you create in the US but sell through N3V therefore technically the assets are imported and thus liable to the tariff as it enters the US.

So it looks like you need to keep track of your purchases then declare them when you do your taxes at the end of the year.

Thanks John

 

[johnwhelan]

Now the EU attempts to collects their tariffs or taxes for digital goods and services directly from companies like Apple and Google. They claim these companies owe the EU billions of Euros because a person in the EU used their services and therefore they owe VAT on the monthly payments.

But if the company providing the services was in the EU then they would have to pay VAT.

Cheerio John

 

[norfolksouthern37]

Interesting, you create in the US but sell through N3V therefore technically the assets are imported and thus liable to the tariff as it enters the US.

So it looks like you need to keep track of your purchases then declare them when you do your taxes at the end of the year.

Thanks John

No, I am afraid you don't understand.

 

[nugget2225]

I am completely confused on why my country is doing this to the world.

 

[johnwhelan]

No, I am afraid you don't understand.

What don't I understand?

Thanks John

 

[pware]

I am completely confused on why my country is doing this to the world.

The rest of the world is also just as confused.

It has been pointed out that in the list of countries that have been hit with a 10% (or in some cases greater) tariff there are places that have no industries and no exports (to the US or anywhere else). In some cases they are uninhabited islands - Heard and McDonald Islands in a remote corner of the Indian Ocean (2 weeks by ship from the nearest port) and Jan Mayen Island in the Arctic Ocean north of Iceland are two examples that have 0 populations and have both been hit with 10% tariffs.

Back on topic - the digital world is complicated by many factors. For example: all the Trainz software is stored on Amazons servers which (I believe) are in the US. So buying a copy of TRS22, for example, is that an import into the US because N3V is an Australian company or an export from the US because the servers are in the US?

 

[Forester1]

As I understand it, tariffs are actually paid by corporations doing the importing and exporting, not paid by the customers directly. So, what the customers see is a higher price passed on from the company. I suppose IF N3V were to have to absorb a 10% tariff from the US, we would see pricing on the Store something like an asset being $20, or $22 for US customers.

 

[wreeder]

You are correct. most imports are at the wholesale level so it is up to the seller to determine the selling price. But raising prices make you less competitive so most companies will eat the cost.

 

[pware]

Hypothetical:

I am a manufacturer based in Australia and I make keyboards that are specifically designed for use with Trainz - e.g. keys suitably marked, a few slider controls added (for cab controls) and a big red button labelled "Horn". I sell them in Australia for the local equivalent of $US110 each (a bargain). I get an order from JR Software for 100 units which I sell to them, p&p included, for $US100 each - discounted for the bulk order and the fact that exports do not attract local taxes.

JR Software pays me $US100 each as agreed. They then also pay the US government $US10 for each keyboard as the 10% tariff on all goods imported from Australia. I, the manufacturer, pay nothing to the US government as I am outside their jurisdiction and not subject to their taxes. JR Software then has to make the decision - do they absorb the extra cost or pass it on to their customers?

If they originally planned to sell the keyboards at $US120 each (still a bargain) do they take a $US10 hit to their bottom line by absorbing the tariff or do they increase the sale price to $US130 each?

There are many people in the US (according to surveys I have seen) who still believe that the tariff is paid by the overseas manufacturer, not the importer or final customer. But even if that was legally true, that extra cost would be passed on somewhere by increasing the price the manufacturers charge to their importing customers (which would increase the tariff cost again - and endless loop is created) and that would eventually be passed onto the end users. Either way, the final customer always pays more.

The situation with digital software downloads may not be as clear cut. It could depend on where the servers that store the software are kept - in the US or Australia?

Please. Do not send me requests for this amazing keyboard - it is a hypothetical.

 

[wreeder]

I am completely confused on why my country is doing this to the world.

Tariffs are are used to protect domestic jobs. Many countries add tariffs and/or restrictions on US imports to protect their own workers. The US is simply doing the same thing now.

It has been pointed out that in the list of countries that have been hit with a 10% (or in some cases greater) tariff there are places that have no industries and no exports (to the US or anywhere else).

The tariffs are based both on the tariffs that a country charges on US imports and on the cost of restrictions preventing the importation of US products. This is an estimate based on loss sales. The Heard and McDonald Islands are an external territory of Australia so therefore are treated as the mainland. Jan Mayen Island is part of Norway and therefore fall under the same tariff as Norway.

Virtually every country in the world use tariffs to protect domestic jobs and many country have restrictions on trade that also protect jobs. The US has seen the loss of millions of jobs due to foreign tariffs and trade restrictions.

 

[pware]

The tariffs are based both on the tariffs that a country charges on US imports and on the cost of restrictions preventing the importation of US products.

Except that Australia does not charge any tariffs on any imports from the US.

The only restrictions are for biosecurity issues. For example the import of US beef is banned because while the US is free of cattle borne diseases such as BSE, the US exporters cannot give a guarantee that all exported US beef is sourced only from within the US and does not originate in countries (such as Mexico) which are not disease free.

 

[wreeder]

the final customer always pays more.

First in your theoretical example, the purchase would be subject to custom duties and not the tariff. Custom duties must be paid by the receiving party in order to get the package(s) released by customs.

Businesses are free to price their items for sale at whatever price they want. However, if that price is not competitive then sales will suffer. So a business might eat the cost for the moment and then claim it as business expense on their taxes. At least that is how it works in the USA.

 

[wreeder]

cannot give a guarantee that all exported US beef is sourced only from within the US and does not originate in countries (such as Mexico) which are not disease free.

This is a common dodge by many countries to deny US companies access to their market. South Korea does the same thing when they prevent McDonald's from selling fries in South Korea. Insisting McDonald's can't guarantee the point of origin of the potatoes used to make the fries. Look, Australian beef is some of the best in the world and a valuable export to all of Asia. I don't have a problem with you protecting it. Just be honest about it.

 

[JimDep]

I am completely confused on why my country is doing this to the world.

I was hoping not to get into this, but have you seen the tariffs that other countries have been charging the US ? The tariffs being imposed now by our government are still far less. It needs to happen as we can't keep getting deeper and deeper into the red before an all out collapse.

 

[grazlash]

The rest of the world is also just as confused.

It has been pointed out that in the list of countries that have been hit with a 10% (or in some cases greater) tariff there are places that have no industries and no exports (to the US or anywhere else). In some cases they are uninhabited islands - Heard and McDonald Islands in a remote corner of the Indian Ocean (2 weeks by ship from the nearest port) and Jan Mayen Island in the Arctic Ocean north of Iceland are two examples that have 0 populations and have both been hit with 10% tariffs.

Norfolk Island, which is part of Australia was hit with a 29% tariff, so I think even the bloke in the big chair is confused. It's both historical and hysterical that this is the first time penguins and polar bears have been taxed.