Understanding Tax and Regulatory Requirements in APAC: A Primer for Shippers

Moving goods across any international border is no small feat, both from a logistical and a compliance standpoint. But the Asia-Pacific (APAC) region can be particularly challenging for shippers to navigate due to the complex and often fast-changing nature of the region’s tax and regulatory requirements.

APAC is made up of a highly diverse group of countries, and their requirements reflect that variation. In order to remain compliant, it’s essential that shippers understand the nuances of each country’s taxes and regulations—or else risk costly penalties.

As part of our ongoing series on regional shipping challenges, here are a few fundamental things shippers must bear in mind before attempting to expand into this region.

Paying taxes and leveraging advantages

When it comes to taxes, tariffs, and duties, there is little consistency across APAC. Each country has its own set of rules, and rates can vary dramatically from one country to the next.

In Singapore, for example, a Goods and Services Tax (GST) is levied on imports. The GST rate is currently 7%, and businesses must assess whether they need to be registered for it. In China, meanwhile, the Value Added Tax (VAT) on imported goods can be as high as 17%.

While the tax landscape in APAC can be complicated, it also offers many opportunities for shippers to lower their costs—if they know where to look. For example, many countries in the APAC regions participate in free trade agreements (FTAs), including the ASEAN Free Trade Agreement (AFTA), one of the largest in the world. This agreement is designed to both support local trade and boost trade with international partners. By operating in free trade zones and applying for trade preferences, companies can avoid many customs duties and put dollars back in the bottom line.

Staying on top of regulations

The intense regulatory burden in APAC can be daunting for shippers trying to break into the region, and things are always changing. Non-tariff measures like import and export restrictions have risen significantly over the past 20 years, with 58% of trade in the region now affected. Evolving customs requirements and import approvals processes can dramatically impact the time and cost of moving goods across borders.

Getting to grips with APAC’s complex regulatory framework and putting robust, reliable processes in place to ensure compliance is vital for shippers hoping to move even modest volumes of freight in the region. Otherwise, the burden on staff can quickly dent productivity and morale, while the penalties for non-compliance can be harsh.

Leveraging a partner with international expertise

Before expanding into any new market, it’s critical that shippers have a plan in place to deal with taxes and regulations. But the truth is, many simply do not have the resources or bandwidth to extensively research and assess the trade laws in APAC—let alone continuously monitor the horizon for changes.

Partnering with an experienced logistics provider with strong APAC penetration can help a company streamline its market expansion and save its team a lot of trouble. The right provider can ensure a shipper is always compliant—and save it time and money.

At CTSI-Global, we own our facilities around the world, including our APAC hub in Singapore. Our dedication to having boots on the ground ensures we know local regulations and tax concerns like the back of our hand. And with support in the local timezone, shippers never have to wait for our offices to open when an issue arises.

Take advantage of our expertise and avoid a compliance nightmare. Learn more about our intentional consulting and logistics management services by contacting us today.

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