This content was produced in partnership with Western Union.
In today’s digital marketplace, it’s almost inevitable that you’ll make purchases from overseas vendors at some point. But buying a small item from an online shop is different than purchasing a big-ticket item, such as a car, a collectible or a piece of real estate, from someone overseas. What kinds of regulations do you need to follow? How can you make sure you’re getting the best exchange rate? What are the most reliable ways to make overseas payments? If you’re looking to make a big overseas purchase, here’s what you need to know.
Understanding the regulatory landscape
Before making a large purchase from an overseas vendor, make sure you fully understand the trade regulations you’ll need to follow. The Hong Kong government’s Inland Revenue Department requires that all written documents flowing in and out of Hong Kong be levied with a stamp duty tax. This means that titles to land, houses or other large or expensive items must be stamped and denoted according to this ordinance, the Government of Hong Kong noted. Before making such a purchase, check with your overseas vendor to ensure they can accommodate these regulations.
Buyers also need to be aware of customs duties when importing goods to Hong Kong. General imports into Hong Kong are tax-free, except motor vehicles for use on the road and the following four types of dutiable commodities: liquors, tobacco, hydrocarbon oil and methyl alcohol, according to Hong Kong’s Customs and Excise Department. If your large purchase is subject to a customs tax, you’ll want to budget that into your purchase beforehand.
Understanding the financial and legal landscape is important when buying big or expensive items from overseas vendors, as it will help you budget and plan for any additional fees you otherwise might not expect.
Navigating exchange rates
Exchange rates are a critical part of any overseas purchase. These fluctuating rates could influence when you make your purchase and how good of a deal you get on your purchase. Fortunately, there are a few ways to navigate exchange rates.
One option is to enter into a futures contract, where the cost of goods is locked in at a predetermined price at a specific time in the future, EBSHK Direct explained. A futures contract can mitigate the risk of price volatility after a period, especially considering that the market price at the time of delivery could be different from the current price.
Another strategy to lower the floating currency exchange price change is to use a derivative contract known as a currency swap. It involves the exchange of currency in one currency for the same in another currency. For instance, if a buyer from Hong Kong purchases an Aston Martin with a loan in British pounds, the person could buy British government bonds to service that loan. This move allows buyers to get a more favourable loan rate in the local currency than if they borrow from a local bank.
If you don’t enter into a special contract for your purchase, don’t worry. The Western Union® app makes monitoring exchange rates easy. You can select the currencies you want to monitor and lock in the rate when you want.
Making payments with money transfers
The Western Union® app offers much more than exchange rate monitoring, too. You can transfer money overseas from your bank account or credit card directly from your smartphone, and you can track your payment to ensure your large sum is delivered on time to the right person. It’s a speedy, reliable and easy-to-use method of making large overseas purchases.
As a legacy entity that has been in business for over 145 years, Western Union offers a reliable way to send money transfers. Next time you’re hoping to make large purchases from overseas vendors, consider mobile solutions like the Western Union® app.
For a reliable and quick way to make overseas purchases, download the Western Union® app.