By Michael Gorman

Amazon's
business
model has been an excellent way to start a business without much
capital and make some good money out of it. You can start selling
your own personal branded products or you can resell items
manufactured by established brands. 

Although
the online eCommerce platform handles most of the logistical aspects
of business, what are the tax implications effective when expanding
Amazon business globally?
Businesses need to understand if they should really worry about
international sales tax and here is an explanation on the matter:

International sellers that aren’t U.S based

International
sellers that aren’t based in the U.S have complex taxing systems if
they have business in-country. However, if they don’t sell or have
a physical presence in the U.S they don’t have to pay taxes. 

For
example, if a Chinese business sells to India, they don’t have to
pay sales tax to the U.S even though Amazon is based in the country.
That doesn’t mean that they are exempt from paying tax in their own
countries, and because of that, they need to visit their tax
professionals to find out. 

Some
countries may require that you charge sales tax or require you to
register to charge Value
Added Tax (VAT).
There also case-by-case exceptions on the tax implications that you
will be exposed to when trading with the U.S. 

When
international sellers use U.S warehouses or have other sales tax
nexus, they will face different regulations. What are they? Here are
the tax implications that international sellers will incur in these
unique circumstances:

If you warehouse stock in the U.S

Amazon
handles the logistical aspects of the business, which doesn’t only
involve the shipping but also warehousing. The eCommerce platform has
different warehouses spread out across the U.S and that’s where
sellers keep their stock until it is time for it to be shipped. Even
though the warehouse isn’t owned by you, it will count as a
significant presence in the state the facility is in. 

Living
outside of the border doesn’t exempt you from sales tax because it
counts as if there is your entity based in the U.S. Wherever the
warehouse is based, you need to pay taxes in that state, that’s if
it is required. 

These
five states that don’t require sales tax, so it is important to try
and find out from the local tax authorities if it is necessary. Above
paying the tax from that state, you might be required to file the
sales tax return in Pennsylvania and Washington. 

The
cause of that is Amazon handles their tax collection in those states,
but you need to find out more about that from the company. Amazon
also handles the sales tax of sellers in the state of Oklahoma and
you also need to find out more about that from the company directly.

All
of this might overwhelm you a bit if you are a part-timer or a
student who’s trying to create a good income source as an Amazon
seller. Take help from tax experts if required and outsource your
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Sales Tax Nexus

International
sellers that aren’t U.S based also have another hurdle to jump
concerning their sales tax. It’s determining how to pay taxes when
they have a sales tax nexus in any state in the U.S. A sales
tax nexus refers
to any business interests in a certain state. 

For
example, even if you have only an office, that is a sales tax nexus
and you need to consult professionals to figure out where you need to
file it. Even things as trivial as having an employee in that state
makes you have sales tax nexus which will make you responsible for
filing in that area. 

Even
if there is no physical presence such as a building, warehousing or
employee in the U.S, you still need to file sales tax if you sell
products in-country. 

Different
states have varying requirements; you may need to fulfill a certain
number of sales or make a specified amount of revenue be required to
file the sales tax. In whatever state you have made significant
transactions, you need to determine if you aren’t liable to file
for sales tax.

International seller compliance

To
avoid being in the bad book of Uncle Sam, you need to be tax
compliant in all states you are trading in. To do so, you need to
choose the perfect accounting firm to get sound advice and take
actionable steps. 

You
will be required to determine the states where you have nexus and
that is where you warehouse the stock, have an employee or own a
building. Also, don’t forget that sales may also count as nexus
once you have reached a certain number of transactions or revenue. 

You
can check where your products have been warehoused in the Inventory
Event detail report on the Amazon portal. To register for sales tax,
international sellers may hit a roadblock because online systems may
not allow their application. 

As
a result, those international sellers may be required to register
using paper systems or call the state directly to log their
application. You may need to register for a U.S bank account to file
sales tax. In that case, you or a business representative may need to
be present at a banking institution to do so.

U.S international seller compliance

Even
U.S based international sellers still need to comply with the sales
tax that is required in their state. They need to register for a
sales tax permit with the relevant tax authority, usually called the
Department of Revenue. 

The
permit will enable you to collect sales tax from each transaction
that is taxable and along with that permit, you will get dates of
filing. Filing the sales tax collected either happens monthly,
quarterly or annually depending on the size of transactions and the
revenue generated. 

Because
of that, you need to have a great bookkeeping system that will allow
you to know the exact size of transactions and where they took place.
That will be very helpful when it is time to file all the sales tax
derived from those transactions. 

You
can opt for sales tax automation tools available online, which
connect to the carts that will autonomously collect the data needed.
U.S companies trading in other countries should also determine if
they require them to file sales tax if they have a sales tax nexus in
their states or cities.

The bottom line

Sales
tax can be a very confusing concept for international sellers,
especially those that aren’t based in the U.S. Because of that,
they need to consult tax professionals that specialize in these kinds
of matters. However, international sellers do have a sales tax nexus
obligation when they have an office, employee or warehouse their
stock in the U.S.

Author Bio:

Michael
Gorman holds rich experience in freelance writing and proofreading.
He is from the UK and currently works as an essay
writer at Essay
writing service UK.
While working for the essay
writing service,
he updates his knowledge through latest books, various blogs and
magazines. You can reach him via Facebook or Twitter.