Importing from pakistan

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celticcc1

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I have the following early stages business plan that I need help with.
Basically I can buy items from Pakistan for €27 per unit F.O.B.
My issue is with freight costs – I want to keep the transport costs as low as possible to ensure a better profit margin.
I initially want to buy 100 units for a total of €2700.
Now I am looking at options for the lowest cost of shipment.
The cheapest freight method will obviously be by SEA CARGO and my initial communication point to a shipment cost to my nearest port of ~€400. After that I presume I will have marine costs also before the TARIC duty (2.7%) and then VAT (21.5%) is applied.
Question 1: Does anyone know a cheap/efficient freight forwarder that will pick up my goods at Sialkot city Pakistan and look after the delivery all the way to my door step i.e. look after shipping, marine insurance, customs clearance (including TARIC cost and VAT) and charge me upon delivery.

My initial estimates are as follows:
Cost to pay manufacturer €2700
Shipping/Marine Insurance €500
Total 1 €3200
Customs TARIC duty (2.7%) €85
Total 2 €3285
VAT (21.5%) €710
Total Cost approx. €4000

I can sell these for over €60 per unit. Therefore my total selling price is €6000 which is made up of the following:
Net €4940
VAT component (21.5%) €1060
Total Sale Price €6000

My net VAT payable to the revenue is (€1060 – €710) = €350

Therefore my profit is ((Total Sale Price) – (Total Cost)) – (VAT Payable)
i.e. ((€6000) – (€4000)) – €350 = €1650.

Does this calculation look okay?
I would appreciate any insight or advice.

Thanks in advance
 
Hi Celtic,
fair play to you first off.

I did something like this from China to Ireland a few years back. Your numbers look accurate to me but I don't think you have to pay the "VAT component (21.5%) €1060
" becausre of the small amount involved. Assuming this is a once off thing & you don't normally do business.

It's been a few years since I did it so my memory is shady but I think you could look into this VAT thinkg further as I think it is negatively skewing your numbers.

Have you verified this is the correct Tarriff for your goods?: "Customs TARIC duty (2.7%) €85" you can check this with the revenue in Tipperary.

Good for you showing some entrepreneurial spirit.

My efforts importing from China failed, I ended up selling the merchandise below cost to cut lossesdue to poor demand.
It is imperitive you understand the market demand for your merch. best of luck.
 
One thing to watch out for when importing from outside the EU, is that the item meets EU regulations. From copyright infringements, CE certification (if required) to lead in the paint etc.
 
Horatio,
Ya the revenue people in Tipp came back with the TARIC number and i went on to the EU revenue site and it tied up with their figure.
Ya the VAT charged does reduce the margin but i don;t think there's a way around this.

Towger, the items also meet with EU regulations.
 
celticcc1 said:
I have the following early stages business plan that I need help with.
Basically I can buy items from Pakistan for €27 per unit F.O.B.
My issue is with freight costs – I want to keep the transport costs as low as possible to ensure a better profit margin.
I initially want to buy 100 units for a total of €2700.
Now I am looking at options for the lowest cost of shipment.
The cheapest freight method will obviously be by SEA CARGO and my initial communication point to a shipment cost to my nearest port of ~€400. After that I presume I will have marine costs also before the TARIC duty (2.7%) and then VAT (21.5%) is applied.
Question 1: Does anyone know a cheap/efficient freight forwarder that will pick up my goods at Sialkot city Pakistan and look after the delivery all the way to my door step i.e. look after shipping, marine insurance, customs clearance (including TARIC cost and VAT) and charge me upon delivery.

My initial estimates are as follows:
Cost to pay manufacturer €2700
Shipping/Marine Insurance €500
Total 1 €3200
Customs TARIC duty (2.7%) €85
Total 2 €3285
VAT (21.5%) €710
Total Cost approx. €4000

I can sell these for over €60 per unit. Therefore my total selling price is €6000 which is made up of the following:
Net €4940
VAT component (21.5%) €1060
Total Sale Price €6000

My net VAT payable to the revenue is (€1060 – €710) = €350

Therefore my profit is ((Total Sale Price) – (Total Cost)) – (VAT Payable)
i.e. ((€6000) – (€4000)) – €350 = €1650.

Does this calculation look okay?
I would appreciate any insight or advice.

Thanks in advance
Click to expand...

Hello Celticcc1,

In relation to the VAT, I would recommend, especially if you want to develop this as a business to register for VAT. VAT paid on imports is a deductible input, i.e. you can reclaim this. Granted, you will also then have to remit VAT charged on sales to Revenue (i.e. you need to add 21% VAT to your selling price).

I recommend you have a look at some of previous posts and look specifically at the document I have attached to a number of posts. If you PM me with your e-mail address I will e-mail you the latest version.

If you also add the details of the shipment, i.e. number of cartons, weight and individual dimensions (length x width x height) I can source a transport price for you.

Be ware, the same applies ex Pakistan as ex China. The supplier in Pakistan may be able to "negotiate" a very attractive seafreight rate, but you could end up with a lot of costs on arrival in Ireland.

Look forward to hear from you

Best regards,
Rudolf289
 
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