Tax Differences in Managed Models 2025

As a seasoned e-commerce operations expert with 5 years of experience in Temu Global Selling, I have encountered numerous challenges related to tax differences in managed models. This article outlines the problem scenarios, underlying logic, solutions, and pitfalls based on real seller cases, while referencing the latest Temu policies and providing data comparisons for clarity.

Problem Scenario

The primary issue arises when sellers operate under Temu's managed model, where the platform handles order fulfillment, customer service, and logistics. In this setup, tax liabilities are often unclear or misapplied, leading to discrepancies in financial reporting and potential compliance risks. For instance, a Chinese seller operating in the U.S. market might face unexpected tax charges due to incorrect classification of their product as taxable or non-taxable.

• Example: A seller from Shenzhen sold home appliances in the U.S. market but was charged additional sales tax despite being registered as a non-taxable entity.
• This led to disputes with Temu’s finance team and delayed payments for several weeks.

Underlying Logic

In the managed model, Temu assumes responsibility for inventory, shipping, and returns, but it also takes control over pricing, taxes, and customer interactions. The platform applies its own tax rules based on the destination country, which may differ significantly from the seller's local tax regulations. According to Temu's official policy (Temu Seller Agreement, Section 7.3), "All sales are subject to applicable taxes and duties, and sellers are responsible for ensuring that all tax obligations are met."

This creates a conflict between the seller's expectations and the actual tax burden, especially for international sellers who may not be fully aware of the platform's tax enforcement mechanisms.

Solution

To mitigate tax discrepancies in the managed model, sellers should take the following steps:

• Register for VAT/GST in target markets: Ensure that your business is registered for VAT or GST in the countries where you sell. This allows you to claim back taxes paid through Temu’s system. For example, a seller from Guangdong successfully claimed VAT refunds by registering in the EU via the IOSS (Import One-Stop Shop) program.
• Review Temu’s Tax Policy: Regularly check the latest Temu guidelines on tax collection and compliance. The most recent update (April 2024) emphasizes transparency in tax calculation and provides a detailed breakdown of tax rates per region.
• Use Temu’s Tax Dashboard: Access the Tax Management section in Seller Central (Seller Central > Financials > Tax Settings) to monitor tax deductions and ensure they align with your expected liabilities.

Tax Comparison Table

Tax Type	China (Local)	U.S. (Temu Managed Model)	EU (Temu Managed Model)
Sales Tax	13% VAT	Varies by state (e.g., 6.25% in New York)	20% VAT (standard rate in most EU countries)
Import Duty	Varies by product category	Not applicable (handled by Temu)	Up to 10% (depends on HS code)
IOSS Registration	Not required	Not required for small packages	Required for shipments over €150

Pitfalls to Avoid

Many sellers overlook key tax considerations when entering the Temu managed model, resulting in financial losses or compliance issues. Common pitfalls include:

• Ignoring local tax registration: Failing to register for VAT/GST in the target market can lead to fines or penalties. A seller from Hangzhou faced a $10,000 fine in the UK for not registering for VAT before selling on Temu.
• Assuming Temu handles all tax responsibilities: While Temu collects and remits taxes, sellers are still legally liable for any discrepancies. A case in point is a seller from Jiangsu who had to pay an additional $5,000 in back taxes after a review by the IRS.
• Not verifying tax