VAT Remittance Programs - Import One Stop Shop (IOSS), VAT On E-commerce (VOEC), UK VAT and Malaysia Sales Tax on Low Value Goods FAQ
IOSS:
The Import One-Stop-Shop (IOSS) is a program that allows you to declare and remit Value Added Tax (VAT) payments monthly using an electronic IOSS portal. Under the IOSS program, the VAT can be collected at the time of purchase, rather than at the time of delivery, and can be remitted directly to the European Union (EU) tax authority. The IOSS can only be used for shipments with a value of less than €150. For shipments over €150, there are no changes to the collection of VAT, duties or other applicable fees on imported goods. More information on the various import charges can be found here.
Use of the IOSS program is not mandatory. You can continue to ship items to the EU member countries, and all VAT, duties and other applicable fees will be collected from the recipient prior to delivery. However, there may be an additional handling fee charged at the door if not using the IOSS.
The EU made changes to Value Added Tax (VAT) rules, effective July 1st, 2021. Namely, the EU has removed the VAT exemption of €22, and VAT will need to be paid by the recipient on all commercial items (i.e. the sale of goods) imported into the EU. This will apply if you sell and ship items to EU member countries. VAT can be collected through the optional Import One Stop Shop (IOSS) program for commercial imports that have a total shipment value under €150. Gifts are not impacted by the new rules.
Registration for the IOSS program is not mandatory, and if you choose not to register your business, the Value Added Tax (VAT) will be collected from the recipient at the time of delivery. If you sell through an online shipping platform (like eBay or Etsy), you will need to contact the platform to see if they are registered for the IOSS program. Please note that in addition to customs duties, VAT and other fees, some EU countries are also charging a handling fee for those items that are not using the IOSS program. The IOSS program cannot be used for goods subject to excise duties (like tobacco or alcohol) or gifts.
You can continue to ship items with Canada Post to the EU and the items will be presented to customs upon entry to the destination, as they are today. VAT, duties or other applicable fees will be collected from the recipient prior to delivery.
If you sell through a marketplace, you will need to contact them directly to determine how the EU VAT changes are being managed.
If using the IOSS program, the IOSS number and the 6-digit Harmonized System (HS) code is mandatory. If these are not received, the item will be treated as unpaid, meaning that the Value Added Tax (VAT) and possibly a handling fee will be collected from the recipient at the time of delivery. To find the right HS code, visit the Canada Post HS Lookup tool.
Further Information:
In order to register for an IOSS number, a business must have an address in one of the EU member states. If you are a non-EU business, you can hire an IOSS intermediary to complete the IOSS Registration. Some marketplaces have their own IOSS number that can be used when using their platform.
VOEC:
The VAT on E-commerce (VOEC) is a program in Norway for low value goods below NOK 2,999 that allows you to declare and remit Value Added Tax (VAT) payments quarterly using an electronic portal. Under the VOEC, the VAT can be collected from the recipient at the time of purchase, rather than collected at the time of delivery and can be remitted direction to the Norwegian Tax Administration.
The use of the VOEC program is not mandatory. You can continue to ship items to Norway, and all VAT, duties and other applicable fees will be collected from the recipient prior to delivery. However, there may be an additional handling fee charged at the time of delivery if not using the VOEC.
As of January 1, 2024, you can use the VAT on E-commerce (VOEC) portal to report the Value Added Tax (VAT). If you have not already done so, you can register your business in the VOEC Register. The VOEC program does not apply to food, beverages, excise goods (such as alcohol and tobacco), illegal or restricted goods. The VOEC number should be included when creating the electronic shipping label, allowing for the number to be sent electronically. If the number is not present in the electronic data, the VAT may be collected from the recipient at the time of delivery. Please see the question ‘I ship to customers in the European Union (EU), Norway, the UK or Malaysia and I have an Import One Stop Shop (IOSS), VAT on E-commerce (VOEC), UK VAT or Malaysia Low Value Good (LVG) registration number I need electronically sent with my package. How do I do this?’ for those instructions.
The VOEC is not mandatory. If you choose not to use the VOEC portal, Value Added Tax (VAT), duty and any additional charges (such as handling fees) will be collected from the recipient at the time of delivery. If you choose to use the VOEC portal, VAT will be paid quarterly by you, the sender.
A list of marketplaces and online shops that have signed up for the VOEC program can be found here.
You can register for the VEOC online. Detailed steps on how to register your company can be found here.
UK VAT:
As of January 1, 2021, senders and marketplaces importing goods less than £135 into the UK must register with HMRC and account for VAT at the point of sale. For goods sent from Canada to UK recipients without using a marketplace, the seller will be responsible for registering and remitting the VAT to HMRC. Alternatively, you can choose to appoint an accountant or agent to submit your VAT returns to HMRC on your behalf.
For goods valued over £135, the recipient will pay VAT, duty and any other applicable fees at the time of delivery. The Low Value Consignment Relief program, which provided import VAT relief on commercial goods valued at £15 or less, has been abolished. Gifts over £39 are liable for Import VAT.
You can register to remit VAT to HMRC online. Detailed steps on how to register can be found here.
If you sell goods from Canada valued at less than £135 to customers in the United Kingdom (UK), you must register for VAT and remit quarterly returns. This can be completed by filling in a VAT Return Form and sending it to HMRC. If you've registered for VAT, you must submit a VAT Return even if you have no VAT to pay or claim. Alternatively, you can choose to appoint an accountant or agent to submit your VAT Returns to HMRC on your behalf.
For shipments valued at less than £135, online marketplaces will be responsible for collecting and accounting for VAT, not the individual seller using the platform. The VAT will be collected from the UK recipient at the point of sale.
Malaysia Sales Tax on Low Value Goods:
As of January 1, 2023, low value goods (LVG) that are sold online from abroad to consumers in Malaysia at a price less than 500 Malaysian ringgit (MYR) will be subject to a 10% sales tax. Overseas online sellers and marketplaces that sell LVG to Malaysia consumers must register as Registered Sellers (RS) if their total sales value of LVG in Malaysia exceeds 500,000 MYR within 12 months, they have a registered business address in Malaysia or they have a physical subsidiary in Malaysia that is licensed under section 13 of the Sales Tax Act 2018. You can also choose to register voluntarily.
Registered Sellers will receive a LVG Registration Number and will be required to issue invoices, charge sales tax on purchases, submit returns every 2 months to RMCD and retain records for a period of 7 years.
You can find more information about the registration criteria here.
Applications for the sales tax can be submitted online through the MySST system or can be downloaded here and either sent by mail or delivered in person.
You must submit your tax return electronically every 2 months and payments can be made after the return submission in the SST portal. Alternatively, payments by Cheque or Bank Draft can be submitted by mail to the Customs Processing Center together with the printed return form.
It is highly recommended that Registered Sellers of LVG provide their LVG Registration Number in the Tax ID field when shipping their package. If you fail to include the tax identification number in the correct way, sales tax will be collected by the recipient at the time of delivery.
General Questions:
VAT is a value added tax on goods and services sold to consumers. VAT remittance programs allow the seller to charge VAT to the consumer at the time of purchase and pay the foreign tax authority directly on a recurring basis. These programs only apply to the payment of VAT. Any applicable customs duties or handling fees may still be required to be paid by the recipient at the time of delivery.
The following programs allow shippers to prepay VAT:
| Program Name | Tax Authority | Scope | Tax ID Format | HS Code | Tax Remittance | Declared Value | Impact of non-usage |
|---|---|---|---|---|---|---|---|
| Import One-Stop Shop (IOSS) | European Union | Commercial Items | IM123456789 | Mandatory | Monthly | Less than 150 Euros | Collection of VAT prior to Delivery, Additional Fees |
| VAT On Ecommerce (VOEC) | Norway | Commercial Items | 1234567 | Mandatory | Quarterly | Less than 2,999 NOK | Collection of VAT prior to Delivery, Additional Fees |
| UK Value Added Tax (VAT) | His Majesty's Revenue & Customs (HMRC) | Gifts over £39 & Commercial Items | GB123456789 | Mandatory | Quarterly | Less than 135 GBP | Refused Entry, Returned at Sender Expense or Destroyed |
| Malaysia Sales Tax on Low Value Goods | Royal Malaysian Customs Department (RMCD) | Commercial Items | YYMM020001 | Mandatory | Every 2 months | Less than 500 MYR | Collection of VAT prior to Delivery, Additional Fees |
When shipping to certain countries, you have the option to prepay the VAT, so the recipient is not charged at the time of delivery. The European Union (EU), Norway, the United Kingdom (UK) and Malaysia currently offer this functionality. These programs are only for VAT. Duty and any other fees (such as handling fees) may be required to be paid by the recipient at the time of delivery.
No, they are not the same thing. When a seller participates in a VAT remittance program, it enables the customs authority to bill the VAT back to the seller in the origin country. DDP is when the seller of the goods takes responsibility for all the fees associated with import customs clearance (VAT, duty and any applicable handling fees). IOSS, VOEC and DDP are not mandatory, and items will not be refused by customs if a shipper chooses not to participate. UK VAT remittance to His Majesty's Revenue & Customs (HMRC) is required by overseas sellers when shipments have a value below £135, where VAT is due. Malaysia requires that overseas sellers register and remit sales tax when the total sales of low value goods exceeds 500,000 MYR within a 12 months period, they have a registered business address in Malaysia or they have a physical subsidiary in Malaysia that is licensed under section 13 of the Sales Tax Act 2018.
You will need to electronically send the tax identification number to the receiving post, which is done automatically when it is entered into the Tax ID field of one of the following Canada Post shipping systems: EST Desktop 2.0, SnapShip and Shipping Manager. The destination customs authorities strongly recommend to not print these numbers on the shipping label to prevent fraud. In addition, the receiving post may not accept any numbers that are solely printed on the label versus submitted electronically and you will risk having your buyer pay for VAT twice.
Canada Post has set up a method for you to send the Import One Stop Shop (IOSS), VAT on Ecommerce (VOEC), UK VAT or Malysia low value goods (LVG) registration number electronically. Please see the question ‘I ship to customers in the European Union (EU), Norway, theUnited Kingdom (UK) or Malaysia and I have an Import One Stop Shop (IOSS), VAT on E-commerce (VOEC), UK VAT or Malaysia low value goods (LVG) registration number I need electronically sent with my package. How do I do this?’ for those instructions.
Commercial customers will have the capability to electronically transmit a tax registration number to the receiving post when using one of the following Canada Post shipping systems:
EST Desktop 2.0:
- Use the ‘Tax ID/IRS/VAT’ field.
- ONLY enter the IOSS number beginning with the prefix IM followed by 9 numeric digits in the following format- IMxxxxxxxxxx
- VOEC numbers are 7 numeric digits
- UK VAT Registration numbers begin with the prefix GB followed by 9 numeric digits in the following format – GBxxxxxxxxx (typically the same numbers as your EORI number)
- Malaysia LVG Registration numbers are 10 digits in the following format – YYMM020001
SnapShip and Shipping Manager:
- Under Step 5 ‘Customs’ section, enter IOSS number in the ‘Tax ID/IRS number’ field.
- ONLY enter the IOSS number in the following format- IMxxxxxxxxxx
- VOEC numbers are 7 numeric digits
- UK VAT Registration numbers begin with the prefix GB followed by 9 numeric digits – GBxxxxxxxxx (typically the same numbers as your EORI number)
- Malaysia LVG Registration numbers are 10 digits in the following format – YYMM020001
Other marketplaces such as OrderCup, NetParcel, Shipstation and Etsy have the ability to enter the IOSS, VOEC, UK VAT or Malaysia LVG Registration Number for merchants using Canada Post as a carrier. Commercial customers using an online shipping platform will need to receive further instructions from their online shipping platform on which field to enter their tax registration number.
Commercial customers will not be able to transmit the tax registration number if creating a label at a Retail post office. They will need to use EST Desktop 2.0, SnapShip or Shipping Manager to create a shipping label before dropping the package off at a Retail post office.
Customs authorities strongly recommend not to write the tax registration number on the shipping label, due to potential fraud concerns. Rather, the recommendation is to transmit these numbers electronically. Canada Post can do this for you - please see the question ‘I ship to customers in the European Union (EU), Norway or, the UK or Malaysia and I have an Import One Stop Shop (IOSS), VAT on E-commerce (VOEC), UK VAT or Malaysia low value goods (LVG) registration number I need electronically sent with my package. How do I do this?’ for those instructions.
If using an IOSS, VOEC, UK VAT or Malaysia LVG registration number to ship to the European Union (EU), Norway, the United Kingdom (UK) or Malaysia, a minimum 6-digit Harmonized System (HS) code is mandatory. If the HS code is not included, the item will be treated as unpaid, meaning that the Value Added Tax (VAT) and possibly a handling fee will be collected from the recipient at the door. To find the right HS code, visit the Canada Post HS Lookup tool.