How Sales Taxes Work When Dropshipping With AliExpress
Updated April 27, 2023.
Due to recent law changes, AliExpress has started charging merchants sales taxes on purchased goods. Depending on where you live in the world, these taxes will vary dramatically.
To help you out, here is the location-specific lowdown on sales taxes when dropshipping with AliExpress.
» Pro tip: Use a Shopify app to help with accounting & taxes
Dropshipping Tax Requirements for AliExpress
Does AliExpress Charge Sales Tax?
Yes, AliExpress will charge sales taxes if you are importing goods into certain locales, states, or countries. For instance, if you are importing goods from AliExpress to the United States and live in certain states, you will be required to pay sales taxes. If you are charged a sales tax when purchasing items and living in an area that you believe shouldn’t be subject to these charges, contact AliExpress’ customer support directly and ask for an exemption.
Why Is AliExpress Charging Tax?
AliExpress may charge applicable location taxes due to laws and regulations that apply to certain locales. It is advised to check your local laws before ordering any products from AliExpress sellers because the AliExpress platform has been known to automatically add taxes to purchases that may not be applicable to you.
Do You Have to Pay GST on Dropshipping?
GST (goods and services tax) only applies to some countries. For instance, if you live in Canada, New Zealand, Australia, India, or some parts of Europe, purchases you make on AliExpress or other dropshipping marketplaces may be subject to GST.
» Best apps for dropshipping
Custom Tax From AliExpress to the USA
Due to the recent tariffs placed on products imported from China, your order (usually at a value of over $200 USD) may be subject to import taxes, customs duties, and fees levied by the United States. These charges will typically be due once the package reaches the country. However, custom taxes are only charged where applicable. Additional charges for customs clearance must also be borne by the recipient.
AliExpress Sales Tax Exemption
Some locations are exempt from sales taxes, GST, custom taxes, and the like. If you believe you are exempt from any of these taxes that are sometimes included in the purchases you make from AliExpress, contact their customer support directly. AliExpress is known to remove these charges from buyers that aren’t in locations that are subject to certain location-based taxes.
Country/City Sales Tax
Depending on where you live and what locale you are running your dropshipping business from, every country, and even different cities, have varying levels of tax.
Here’s a quick breakdown of the different types of taxes you’ll likely come across in different parts of the world.
USA
All goods imported from China are now subject to a nationwide value-added tax (VAT). Most goods imported for dropshipping purposes will likely be subject to a 17% tax.
Merchants within the US will be responsible for VAT on all purchases made on AliExpress. This needs to be done through the VAT clearance procedure, aligning with local custom authority requirements.
Canada
Canada requires all goods under a $20 CAD value that are sold within the country to be subject to a 13% goods and services tax (GST) or a provincial sales tax (PST).
Europe
Depending on the country of residence, sales taxes also apply to certain countries within Europe. This is of particular importance to merchants that operate within a country that forms part of the European Union.
New Zealand
Those merchants that are selling Chinese products within New Zealand will have to pay a 15% goods and services tax (GST) for goods valued at $1,000 NZD or less. At this time, AliExpress is required by law to collect this tax and remit it to local New Zealand tax authorities.
Australia
Similar to New Zealand, Chinese taxes that are sold within Australia will be subject to a 10% GST. Again, AliExpress is required by law to collect these taxes at the time of purchase.
Law of American States Regarding Sales Tax
The law of American states regarding sales taxes and other location-based taxes vary depending on which state you live in or do business from. As it stands, here are the American states that AliExpress must withhold sales taxes from and the dates these laws were rolled out:
- Alabama, Oklahoma, Kansas: 1 Dec 2019
- Arizona, Minnesota, Utah, California, North Dakota, Colorado, Maryland, Texas, Nevada, Tennessee, Wisconsin, Massachusetts: 1 Oct 2019
- Arkansas, Pennsylvania, Wyoming, Idaho, Indiana, New Mexico, Vermont, West Virginia, Kentucky, Virginia: 1 July 2019
- Columbia, Nebraska: 1 April 2019
- Connecticut, Iowa: 1 January 2019
- Hawaii, Illinois, Michigan: 1 Jan 2020
- Maine: 1 Nov 2019
- New Jersey, South Carolina: 1 November 2018
- New York, Idaho: 1 June 2019
- Ohio: 1 Sept 2019
- Rhode Island: 27 June 2019
- South Dakota: 1 March 2019
- Washington: 1 October 2018
Are You Required by Law to Collect States Tax?
All the sales taxes and other applicable taxes held by Aliexpress are administered under local law. If you think you are exempt from these taxes, contact AliExpress.
Relevant Local Tax Authorities
Depending on where you are located, your relevant local tax authorities can be contacted through different means. For the US, your local tax authorities can be found through the IRS’s website.
What This Means for You
Depending on where online merchants live and where they are selling their goods, they may be subject to sales taxes. To be sure you are paying an adequate amount of sales tax, it’s best to get in contact with local authorities as laws and regulations around imported goods are subject to change. As a side note, in order to be charged a sales tax you must make a sale in the first place. This list of best sales increase apps is sure to help any e-commerce merchant especially if you're using popular platforms such as AliExpress and Shopify.
