I’m in the UK here… We were shocked when Apple started charging the same price in POUNDS that they do in DOLLARS… I just looked up the price of the base 14" M3 MacBook Pro: $1500 in US and £1699 in the UK !!! That is insane given the exchange rate today shows $1500 = £1219 In fact I think it would be cheaper for me to book a cheap flight to New York, stay over with a friend for a few days and buy one there!
I note also the base model ships with only 8Gb RAM… so there is even more gouging to upgrade to 16Gb; yet another £200! I’m using a 13" M1 Mb Pro with 8Gb RAM now. I’m not seeing memory issues on this machine but it’s mainly for web browsing. I wonder if/when I would need 16Gb?
The base MacBook Pro is $1600 in the US, which does not include VAT. The British price does – subtracting the 20% VAT means that the equivalent price is £1415, which works out to about $1740. Still pricier but not crazily so.
US prices don’t include sales tax; always added extra on advertised price as different regionally.
The rate can be anywhere from nil rate percentage (in just a few locations, e.g. Delaware et al.), but is more likely due, adding up to ~12% at the top rate currently. So that $1600 becomes $1800 (£1500).
More poignantly for our pricing, both vat AND duties are added to that US advertised price.
VAT: $1600 x 20% vat = $320, + Duties: maybe 10% on pre-vat price = $1600 x 10% duties = $160.
So that $1600+480 = $2080 (~£1715). They then sometimes round prices for neat marketing = £1699.
I was assuming I would buy it in New York, discard the box and packing and simply carry it back to the UK in my carry on day pack. Are you saying I’d have to add 20% for VAT (ie $320) when purchasing in the store? If so the price Apple displays of $1599 is very deceptive.
You sounded like you were making a supposition about doing this. Hence the explanation of tax differences not being what you described.
Anyway, you could do that as they’re not going to know are they (though boxes are useful for future resale, so you could ship yourself the box via economy shipping, lol!).
But issues are still there. Firstly, you’re still going to have NYC sales tax at time of purchase (I believe this is currently 8.875% per Google search, but it was a few years ago ~11.5% when I was there?). Secondly, it’ll come with a US keyboard unless you order it with a UK keyboard in advance for collection. And finally, it’ll definitely come with the US plug on the power adapter, though you can change that easily or use an adapter.
I think you are legally supposed to declare that hypothetical Mac to UK customs when you bring it into the country, and pay the VAT then. Depending on the laws, you might be able to argue that you should be credited whatever state tax you paid when buying the computer in the US, but I’m not only not a lawyer, I’m also not a barrister in the UK, so I could be totally wrong about all of this.
You’re likely to get away with it, I suppose, but if HMRC discovers you “smuggling” a new and expensive piece of electronics into the country without declaring it, I suspect you’ll find yourself in a world of pain.
(And yes, I am a barrister in England but I’m not writing with any authority whatsoever in this field, which is wholly different from mine.)
In the USA, sales taxes (which are set and administered by state and local authorities) are almost always not included in the advertised price; furthermore, except for motor vehicles, most taxing authorities don’t refund those taxes for non-residents. When you re-enter your home country, you usually are asked about major items purchased abroad to see if taxes are owed. You may be able to apply the amount you have paid to lower the amount you would need to pay.
Note that the sales tax rate in the USA varies between states and even smaller subdivisions. So, if you cannot get a credit against your local fees, it pays to see if you can purchase from a low or no-tax location.
Note that high sales tax US states often try to assess a ‘Use Tax’ to capture the revenue lost from arbitraging purchases. However, the collection of this tax is spotty.
It is definitely true that almost no one file use tax payments, however I know for a fact that the state police in my state (where there is a 6.25% sales/use tax) will, on occasion, set up roadblocks near the boarder with the neighboring state (where there is no tax) to catch scofflaws bringing in large dollar purchases.
I would imagine they can do little more than politely remind the person to pay their use tax, since it can’t be proven they did not intend to do so within the 90 days allowed.
If you bring an item into the UK for personal use, then there is a “personal allowance”. The amount will depend on where you’re traveling from, and where you’re arriving.
You must declare items over your allowances
If you go over an allowance, will have to pay tax and duty on all the goods in the category.
VAT and duty will be on the total value of the goods, not just the value above the allowance.
It appears that the allowance (for non-alcohol and non-tobacco goods) is £390. Far far less than the cost of that MacBook Pro.
If you break the rules, the items may be seized and you may be fined or prosecuted. So don’t cheat.
If you bring an item into the UK for use in your business, you must declare it. There is no duty-free allowance for commercial items. You will need to:
Interest is the prime rate + 3%, compounded annually
At the end of each year, any still-due tax, penalties or interest will become part of the balance on which the interest is charged.
There’s a late filing penalty of 5% for every month it’s late, up to 25% of the balance owed, plus a possible $100 per month.
And don’t forget that all these penalties become part of your balance at the end of every year.
If they send your tax bill to a collection agency, then add another 11% to cover that.
So if you were to owe $300 use tax on a computer and chose not to pay it:
After one year, you’ll owe: $1610 (more than the whole computer):
$300 (the use-tax)
$75 late-filing penalty (25% of the balance due), plus
$1200 ($100 per month late-filing penalty)
$34.50 interest (8.5% prime rate + 3% = 11.5%)
And then that total amount becomes the baseline for next year’s interest and penalties, meaning after two years you’ll now owe $3398:
$1610 (baseline from the previous year)
$403 late-filing penalty (25%)
$1200 ($100 per month late-filing penalty)
$185 interest
If the state chooses to not audit you for seven years (the maximum if they don’t suspect fraud - even though refusal to pay use tax definitely is fraud), and then hand it over to a collections agency, this is going to come to:
$5,839 after three years
$9,170 after four years
$13,718 after five years
$19,925 after six years
$28,397 after seven years. Plus the 11% collection agency fee, making it $31,521
All to save $300 in sales tax. Not worth it.
They definitely don’t audit everybody, but there are plenty of random audits every year, and should they choose to do so, large out of state purchases are not very hard to spot. And if they suspect fraud, there is no limit to how far into the past they can choose to investigate. After a few decades, the penalties of a $300 tax bill can add up to more than everything you’ve earned for your entire life.
Which is why I live in Oregon, where there is no sales tax.
Though years ago I did have a friend visit who bought the original 5K iMac (very expensive at the time) while he was here simply to avoid sales tax in his state. I assume he wasn’t planning on paying the “use” tax, even though I reminded him he was supposed to do that.
It’s feeling a bit like you’re looking for something to be annoyed with Apple about. The price thing wasn’t nearly as much of an issue, as many people noted, because of VAT. This, too. Which tax is Apple supposed to advertise their computers with? The local tax? British VAT? The sales tax for any of the other countries that might have tourists buying? US prices traditionally don’t get advertised with tax – that’s a general thing, not something peculiar to Apple. In the end, you might just buy what you want in the UK and be happy with it.
Although I’d love it if US retailers would advertise the post-tax price, most of the time, it’s just not practical. The problem is that sales taxes vary by state and sometimes even by city within a state.
If you’re running a small local business, you can just post your post-tax prices. No problem.
But if you’re running a web site, now you’ve got to somehow know what the tax will be for the person browsing the site. Which you can’t possibly know until after you get a shipping address. And unless they already have an established account, you won’t know what that is until they go to check-out their purchase.
Plus, these rates change all the time. States and cities are always making changes. And they often have “sales tax holiday” incentives, where certain things are tax-free at certain times (e.g. school supplies in the autumn) in order to stimulate various parts of the local economy. It’s bad enough that a retailer needs to somehow track this for their checkout system, but can you imagine the nightmare of needing to update your advertised prices based on this?
And can you imagine the hate mail you’d get if people see one price on the site before logging in, and another higher price after they log in (and you know their shipping address)? No amount of explaining “we didn’t know your tax rate until you logged on” is going to convince an irate customer (or the press) that you aren’t trying to run a scam.
I’m afraid the only way a US vendor will be able to advertise post-tax prices will be if the country somehow mandates the rate for all sales taxes nationwide, or imposes a national sales tax and bans state- and local sales taxes. Which won’t ever happen. No matter what your personal politics are, you’re going to object to at least one (if not all) of these conditions, and as long as the tax rate varies by location, an on-line business would be mad to advertise anything other than the pre-tax price.
Apple have always charged pound for dollar prices in the UK and you should also be aware the price includes around 20% VAT n(value added tax) which does not go to Apple.
US: There is no current trade agreement between the UK and the US. Negotiations started in May 2020 but there have been none since October 2020. An agreement is not expected soon.
