New Delhi, NFAPost: Avalara, Inc, a leading provider of cloud-based tax compliance automation for businesses of all sizes, announced enhanced capabilities for Avalara’s cross-border solution, an integrated offering that helps businesses sell internationally by managing the complexity of customs duty and import tax compliance.
The new offering builds on Avalara’s range of technological solutions available to improve the cross-border compliance experience for businesses.
Avalara’s cross-border solution consists of Avalara AvaTax Cross-Border and Avalara Item Classification, providing users with an integrated approach or stand-alone offerings to address the complex processes of classifying products and calculating custom duties and import taxes.
Cross-border ecommerce is growing rapidly as more consumers shop online, and more businesses take advantage of the speed and ease of selling their products online.
According to IDC, by 2022, cross-border ecommerce is expected to account for more than 15% of the world’s online retail market. eMarketer estimates that the global online retail market will grow to $5.7 trillion by 2022. While demand for cross-border ecommerce has risen, so has the complexity surrounding country-level tax and customs regulations.
Online retailers must meet high customer expectations when it comes to the entire shopping experience — from browsing to delivery. Cross-border sellers must ensure that customs duties and import taxes are accurately calculated at the time of checkout to mitigate compliance risks and avoid negative customer experiences with surprise costs at the time of delivery.
Unfortunately, for many businesses, the task of manually assigning tariff codes and calculating customs duties and taxes is resource intensive, costly, and subject to human error.
Cross-border tax compliance
Avalara’s cross-border offerings give online retailers a bundled solution that helps automate critical cross-border compliance processes, including item classification as well as customs duty and import tax calculations.
Avalara Item Classification
Avalara Item Classification helps automate the complex process of assigning the correct country-specific Harmonized System (HS) codes to products, so online retailers can easily classify consumer products for shipment to over 150 jurisdictions. This enables online retailers to:
- Reduce the risk of customs delays. Leverage complete country-specific HS codes for advanced shipping information and customs clearance.
- Preserve margins and reduce the risk of customs penalties. Improve customs duty calculations and customs clearance resulting in fewer exceptions, which can lead to unexpected fees by customs agencies.
- Simplify the management of HS classification at scale. Helps automate the manual process of mapping HS codes to achieve end-to-end compliance.
- Scale resources and increase efficiency. Accelerate the time to market for new products for cross-border purchase through faster HS code classification and streamline internal resources for higher-value work.
AvaTax Cross-Border calculates customs duties and import taxes in real time for consumer products while seamlessly populating cross-border taxes into online shopping cart experiences. This enables online retailers to:
- Create a transparent, frictionless buying experience for international customers. Calculate customs duties and import taxes during the shopping experience to help reduce cart abandonment and customer churn due to inaccurate or missing tax information.
- Maintain control of the ecommerce tech stack. Extend the application using a simple API to calculate customs duty, import tax, and sales and use tax to more than 150 international jurisdictions.
- Preserve and enhance margins. Ensure that duty and tax calculations collected from customers at the time of purchase cover downstream duty charges imposed by customs agencies. Couriers can take time to invoice for importation charges.
IDC Research Manager Kevin Permenter said there is a large opportunity for retailers to reach more customers through cross-border ecommerce, but the associated compliance obligations pose a significant risk to the customer experience if not handled properly.
“Tools that automate the cross-border compliance process provide retailers with increased duty and tax calculation accuracy and improves the customer experience by mitigating the risk for surprise costs due to inaccurate tax charge,” said IDC Research Manager Kevin Permenter
Avalara Technologies Pvt. Ltd Managing Director Manjula Muthukrishnan said Avalara India has been in operation for more than a decade, and see ourselves becoming a vital part of India’s digital and tax transformation story.
“In the current health crisis and the following economic situation, small businesses are striving to resuscitate their businesses and looking for new revenue streams. Expanding to global markets with cross border trade is becoming significant day by day. With cross border trade, one of the most critical tasks that businesses should undertake before exploring markets outside India is familiarising themselves with the local tax compliance needs of the country where they are selling to,” Avalara Technologies Pvt. Ltd Managing Director Manjula Muthukrishnan.
Avalara Technologies Pvt. Ltd Managing Director Manjula Muthukrishnan said the company firmly believe that cross-border solutions will help businesses, especially e-commerce sellers and merchants, save their time with product classification and provide their customers with a transparent assessment of customs, duties and other local taxes involved in each transaction.
Avalara chief product officer Sanjay Parthasarathy online shopping has made it so that geographic borders no longer constrain how and where consumers make purchases.
“For online sellers, expanding into global markets has become essential to stay competitive and reach new customers, but it has also opened them up to a new world of compliance complexity. Our goal with Avalara’s cross-border solution is to provide online retailers with an easy-to-use platform that supports the complete cross-border transaction life cycle, including item classification and calculations,” Avalara chief product officer Sanjay Parthasarathy.
Avalara Item Classification and Avalara AvaTax Cross-Border can be leveraged as an integrated solution or as stand-alone modular products for cross-border and item classification to support your business’s compliance needs. Avalara’s cross-border solution can be combined with Avalara AvaTax to integrate all tax calculations for data visibility across your business’s transactions.
Avalara helps businesses of all sizes get tax compliance right. In partnership with leading ERP, accounting, ecommerce, and other financial management system providers, Avalara delivers cloud-based compliance solutions for various transaction taxes, including sales and use, VAT, GST, excise, communications, lodging, and other indirect tax types. Headquartered in Seattle, Avalara has offices across the US and around the world in the UK, Belgium, Brazil, and India.