Thursday, January 7, 2016

Important things to remember when ordering goods from abroad

Here's a bit of Hebrew slang you may not have heard before: Shitat Matzliach (literally, "Succeed Method"). It's based upon an old joke, whereby a diner in a restaurant receives a bill with Matzliach (succeed) as one of the items listed. The diner asks the waiter what this means, and the waiter answers, "Sometimes we succeed, sometimes we don't. In your case, we didn't."

(Yes, I know I'm a serial killer of jokes. It sounds a lot funnier in Hebrew, trust me).

Unfortunately, here in Israel, Shitat Matzliach is rampant. One of the more annoying instances of this happening is when you find this really good deal online, pay the price and shipping costs, and then your package gets stuck in customs for God knows how long, and then you still have to pay the ransom taxes and fees the post office or shipping company decides to collect from you. You might as well not have bothered and just bought it locally...

While the rules are, indeed, the rules, and sometimes you can engage in your own bit of Shitat Matzliach and not get caught even when you need to pay fees (I do NOT recommend you try this), sometimes the fees seem totally made-up and exaggerated. But they do it because they can.

And that's something you, the customer, need to consider before you order anything from abroad - what extra charges might be tacked on, and how - and if - you can deal with these.

Israel Post takes 2 main criteria into account when levying fares upon goods entering the country via the mail: the items' price and their weight.

Packages containing items totalling up to $74.99 in value are exempt from all taxes. This price is exclusive of shipping costs, so even if, you buy, say, $70 worth of goods at Vitacost and then there's still $10.99 shipping to pay, the package still will arrive here tax-free. I prefer to pay as few taxes as I can legally get away with (don't we all?), so I suggest that if at all possible, you try to limit your purchases to this type of package.

However, there are a few pitfalls and exceptions you need to be aware of:

* Alcoholic drinks and tobacco products will incur taxes regardless of price (hence the popularity of Duty Free stores at airports).

* Two or more packages sent from the same retailer within 72 hours of each other will be considered as one package, even if the contents of each package alone is worth less than $75.

* Sales: You may happen upon an incredible sale at an online retailer abroad and buy goods worth more than $75, but actually paid less than that amount. Most retailers will list the actual price paid them, but a few might list the original total of the items, which may incur taxes. However, if you have an invoice and thus can prove you actually paid less than $75, you can appeal the request for taxes (via this form) and you'll most probably be reimbursed.

Cashback, of course, is rebated after the fact and does not count towards these types of calculations.

* Consider the exchange rate: As the cutoff point is listed in US Dollars, when buying goods in a foreign currency other than USD, you need to take into account that the exchange rate may go up or down. If the total value of the goods according to the exchange rate the day the package enters the country is over US $75, you'll be required to pay tax, regardless of what the exchange rate was on the day you bought the item. So I suggest allowing for a safety margin and not spend more than the equivalent of $72-73 if you're paying in Euros, British Pounds, or Dollars other than American (You're welcome to consult the currency converter in the left-hand column).

*Packages weighing over 2kg will most probably inspected by customs regardless of their value, and billed NIS 35 for customs release. So try and keep your packages light.

Packages containing items totalling between $75 to $499.99 will be charged with 17% VAT, and purchase tax when applicable (e.g., items such as cellphones and TVs), but are exempt from customs. Most imported car parts in this price range will incur a flat tax of 48.1% as well. The Ministry of Finance keeps a list (in Hebrew) of various items people often buy, along with the expected tax rate on these items.

It's also important to know that in this price range, while the qualifying price to pay VAT is exclusive of shipping and insurance charges, once you qualify to pay the tax, you pay it on those fares as well. For example, if you buy $85 worth of stuff at MyHabit and pay an additional $15 in shipping, you'll be charged $17 VAT (i.e., 17% of $100).

Packages with a value of $500 and up will be charged with both 17% VAT and customs, determined according to the value of the merchandise and its weight.

Now that we've gotten the laws straight, let's discuss the large gray area of expedited shipping services - EMS, UPS, FedEx and the like. These companies often tack on fees for releasing packages from customs and other services that can add up to hundreds of extra Shekels, and the reasoning behind them can be mystifying for the layperson. As far as I can tell, Shitat Matzliach reigns supreme in this particular domain. Bottom line - when at all possible, avoid expedited shipping services. Not only is it already more expensive, you might find it even more expensive that you bargained for.This is doubly true in the case of packages with a value over $75 or heavy packages, which are already more likely to be under scrutiny of Israel Post and customs.

Package forwarding services usually make you pay any taxes and fees owed before they send you your items, so this is much less of an issue using them, and an option worth looking into when you expect a package to incur extra fees.

As mentioned before, if you believe the fees were excessive on a given package, you can fill out and send Israel Post an appeal form. Appealing will probably be less successful with the various express delivery services, I'm afraid.

Here's hoping you enjoy your online shopping expeditions and never end up the frier of the postal services!

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