Cross-border e-commerce (E-commerce) has expanded worldwide with Amazon, eBay, Shopify, and Corona Vortex, and is now the focus of attention for all companies. Cross-border e-commerce is often introduced as a good thing, with sales starting within minutes of creating a site and new sales opportunities from markets around the world. On the other hand, local taxes and various other costs are not shared much: local taxes such as VAT are levied and collected by the seller on the local buyer, but even in the case of cross-border e-commerce, there are cases of taxation, collection, and reporting.
Tax accountants, lawyers, and various other domestic professionals do not necessarily have knowledge of overseas tax and legal affairs.
IN THIS COLUMN, OPTI CORPORATION, WHICH HAS EXTENSIVE EXPERIENCE IN THE TAX ASPECTS OF CROSS-BORDER EC, PROVIDES A "CROSS-BORDER EC TAX NAVIGATOR" IN A Q&A FORMAT.
WE HOPE THAT OUR EC TAX NAVIGATOR WILL BE OF HELP TO VARIOUS COMPANIES CONSIDERING CROSS-BORDER EC.
Q] I sell iPhone apps and Google Marketplace apps to individuals. We sell our apps in the UK, EU and US. We also generate revenue from the said apps. However, our worldwide sales are still only about 1 million yen per year, so we cannot say that we have been successful yet. Currently, we also pay proper Japanese corporate tax.
I HAVE BEEN ASKED BY A VC WHO HAS INVESTED IN OUR COMPANY TO CONFIRM WHETHER APP SALES ALSO REQUIRE LOCAL TAX FILING. FROM READING SOME WEBSITES, I AM BEGINNING TO THINK THAT PERHAPS LOCAL TAX REGISTRATION AND TAX FILING IS REQUIRED.
Should we file local tax returns, levy local taxes, etc. when this is the case?
A] When selling electronic services, including iPhone applications, you will be required to file indirect tax returns in various parts of the world. Even if you pay corporate tax in Japan, it does not mean that you are exempt from overseas tax registration and tax filing obligations.
For example, the following actions are basically required in these three regions.
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U.K. - Prior local VAT registration and declaration is required, even if the sales amount is small. |
THE ABOVE EXAMPLE IS A SIMPLIFIED ONE. IN PRACTICE, THE ANSWER WILL DIFFER DEPENDING ON VARIOUS CIRCUMSTANCES, SUCH AS WHETHER THE COMPANY HAS ITS OWN LOCAL SUBSIDIARY, WHETHER IT HAS A PE FIRM, AND WHERE THE INVENTORY IS LOCATED.
In addition to this, the conclusions that can be reached are completely different for platformers and for the IoT, since there are different taxation relationships again.
The sale of digital goods is frequently updated and may be taxed on a country-by-country basis, so you need to be constantly aware of these taxation systems.
Please also refer to this E-book for more information.
Disclaimer
This column contains general information only and is intended to be used at the reader's own risk. While every effort is made to improve the accuracy of the information, it may contain inaccuracies. Readers should consult a suitably qualified professional before making any decision or taking any action and assume the entire risk and responsibility for any loss arising from the use of this column.