JULY 2023 GLOBAL TRADE COMPLIANCE NOTICE

SCOPE

• All Merchants selling internationally through FlavorCloud
• DDU (DAP & DPU) and DDP shipments
• Destination-specific itemization below by country
• Sales & Turnover thresholds and timeframes outlined below by country

PURPOSE

FlavorCloud takes care of the various import duties, taxes, and tariffs assessed at the time of parcel importation. Certain countries have also imposed separate revenue and sales tax requirements on entities selling products within or into their jurisdictions. These separate and independent regulations may impose requirements for merchants to potentially register, collect, remit, and report sales and revenue tax if they meet the thresholds and parameters set forth.

The purpose of this notice is to alert FlavorCloud merchants of these requirements, outline thresholds and parameters, and to urge our merchants to work with their tax attorneys/accounting professionals to determine their global revenue and sales tax liabilities.

ROLES & RESPONSIBILITIES

FlavorCloud Responsibilities

FlavorCloud’s role in these cross-border transactions is to take care of the logistics, customs filings, and all import related duty, tax, and other fees for parcels. FlavorCloud will assist our merchants by:

• Providing product alerts to assist identifying when merchants are close to, or have surpassed, potential thresholds.
• Instructions how to include tax registration details with their shipments.
• Self-serve sales tax reports including country-specific sales tax and de minimis details.
• Continued thought leadership to ensure pertinent regulatory updates impacting our merchants are communicated as proactively as possible.

While we are eager to assist our merchants and partners with high level country and commodity guidance to identify any potential admissibility, regulatory, accounting/taxation, or other customs concerns with the import filings, there are limits to the specific guidance we can provide. These regulations also normally require someone with an intimate understanding of the product’s nuances, applications, caveats, and other specifics. Depending on the country, the scope of qualifying sales may also include shipments and global revenue outside of shipments facilitated by FlavorCloud.

Merchant Responsibilities

Merchants must work with their tax attorneys/accounting professionals to determine their separate and independent global revenue and sales tax liabilities and ensure compliance with these obligations.

When merchants reach country thresholds for sales, and meet the country specific sales tax liabilities, they will be required to work with their tax attorney to establish in-country presence as well as file sales taxes for their own entity. As we are not explicitly acting as our merchant’s agent, consultant, accountant, or any other type of protected and obligated in-country and commodity/tax expert, we cannot provide specific guidance on what is required to facilitate any potential permits, certifications, registrations, licenses, or other requirements.

COUNTRY-SPECIFIC DETAILS

NOTES

∑ – Financial Thresholds and Timeframes

Countries may have multiple different options for how they categorize businesses. Among others, these categories include foreign supplier, overseas seller, foreign entrepreneur, non-established taxable person (NETP), etc.

This is important as these different categories generally carry separate financial thresholds and timeframe parameters for when a business needs to independently register for sales & revenue tax. Where available, we’ve listed the lowest possible financial threshold to promote awareness and proactively assist our merchants with their independent obligations. We’ve also noted individual countries with the potential nil threshold: where a company must register for foreign sales & revenue tax upon their first qualifying sale into the country. All countries may have the potential for a nil threshold depending how you’re categorized.

To perform the registration assessment, merchants should first verify how they are categorized and only thereafter determine the set of financial thresholds and timeframe parameters for qualifying shipments which apply to their category.

CAUTION

Please note that the indicated independent foreign sales & revenue tax registration requirements are non-exhaustive, dynamic, and may change without advance notice. Depending on the country, the scope of qualifying sales may also include shipments and global revenue outside of shipments facilitated by FlavorCloud.

FlavorCloud recommends that our merchants use these tools as a reference only. Merchants are responsible for consulting current official regulations and requirements for each country prior to shipment as well as regularly monitoring changes to ensure continual compliance. Merchants should also engage their tax attorneys and/or accounting professionals, as needed, prior to shipping to a new country, and to ensure ongoing continued compliance.