In the cross - border business of TikTok, consumption tax is an important aspect that merchants cannot afford to ignore. Understanding the calculation, collection, and impact of consumption tax on merchants can help them better operate their stores and improve user experience.

1\. Definition and Collection of Consumption Tax

Definition: Consumption tax is the tax that the platform withholds and pays to the US Tax Authority on behalf of users when they place an order. It is automatically calculated based on the buyer's address and is part of the total product price.

Collection Method: When a user places an order, the platform will display the pre - tax price on the product details page and charge the corresponding consumption tax at checkout. For example, if the order subtotal is $69.90, the sales tax is $6.54, and the total is $76.44.

2\. Impact on Merchants

Settlement Process: When the platform settles with merchants, it will deduct the consumption tax that has been withheld and paid on behalf. This means that the actual amount merchants receive is the pre - tax product price minus the platform - related fees.

Pricing Strategy: Merchants need to consider the impact of consumption tax on the final selling price when setting product prices. Reasonable pricing can help enhance product competitiveness and ensure merchants' profits.

3\. Important Considerations for Merchants

Tax Compliance: Merchants should ensure that their tax information is accurate and complete, and comply with local tax regulations. The platform will handle tax - related matters based on the information provided by merchants. Incorrect information may lead to tax issues.

User Communication: Merchants should promptly explain the relevant information about consumption tax to users to avoid misunderstandings or complaints due to tax - related issues. Good communication can help improve user satisfaction.

4\. Future Trends Outlook

With the continuous development of TikTok's cross - border business, consumption tax policies may be adjusted according to changes in tax laws of various countries. Merchants need to closely follow the latest policy information released by the platform and adjust their business strategies in a timely manner to adapt to market changes.

In conclusion, TikTok consumption tax is a crucial link that merchants must pay attention to in cross - border operations. By deeply understanding the calculation, collection, and impact of consumption tax on merchants, they can better plan their operations, enhance competitiveness, and achieve sustainable business growth. Merchants need to keep an eye on tax policies to ensure compliant operations and provide users with high - quality services and products.

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