Introduction.
Cross-border e-commerce (E-commerce) has been expanding worldwide with Amazon, eBay, Rakuten, Shopify, WooCommerce, and Corona Vortex, and is now the focus of attention by all companies. Cross-border e-commerce has been introduced with the positive aspects of being able to start selling 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.
Not all tax accountants, lawyers, and other domestic professionals 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 THIS CROSS-BORDER EC TAX NAVIGATOR WILL BE OF HELP TO VARIOUS COMPANIES CONSIDERING CROSS-BORDER EC.
Q] What is sales tax?
A] Sales tax is an indirect tax imposed on the sale of goods and services in the United States, similar to the Japanese consumption tax. In English, it is called Sales and Use Tax.
Sales tax is a state tax, not a federal tax in the United States. Sales tax is currently adopted by 45 states. Sales tax is very difficult to research in detail because each state has very different rules.
What is the Sales Tax Nexus?
The obligation to register and collect sales tax is described as having a nexus (nexus).
The nexus for determining whether a vendor is obligated to collect sales tax is as if the vendor has nexus in the state, even if the vendor is out-of-state, if any of the following facts are present
- 州内に代理人がいること
- 州内での広告宣伝
- 州内に運搬車両があること
- 州内での所有権の移転
- 州内での勧誘
- 州内での販売促進活動
- 州内に資産を所有していること
- 州内でサービスを提供していること
In summary, if the corporation (1) has an office in the state, (2) owns property in the state, or (3) has salesmen or agents who regularly visit the state, for example, three or four times a year, the corporation is considered to have a physical presence in the state and is subject to sales and use tax sales and use tax.
In order for a U.S. state to require registration for sales and use tax purposes, there must be a minimum level of involvement in that state. As we discussed earlier about cases that are nexus-certified, these engagements, or "nexus" certifications, vary from state to state.
In addition, the sales and use tax nexus standards for each state differ from the scope of certification for other taxes (e.g., corporate income tax, employment tax, etc.). Note that there are separate nexus standards for local federal corporate income taxes and state corporate income taxes.
Internet Nexus
For nexus, in addition to the aforementioned normal nexus, there is also an Internet-specific nexus.
- Click-through nexus
- Economic Nexus
- Affiliate Nexus
- Marketplace Nexus
If you fall under any of the above nexuses, you will be subject to sales tax as well as the regular nexus. Please note that meeting even one of these will result in sales tax registration and filing obligations.
Thus, $100,000 per year or 200 transactions (depending on the state).It is not enough to be concerned only with the economic nexus.
Cross-border EC sellers often mistakenly believe that they are exempt from all sales tax registration and reporting obligations when selling on Amazon.com in the U.S. due to the existence of the Marketplace Falsifier Act.
In fact, the Marketplace Facilitator Act does not exempt you from sales tax registration and filing requirements. In addition to the regular nexus, a determination must be made for all four Internet-based nexuses listed above.
Sales Tax Registration
In order to collect sales tax, you must register for sales tax. Once sales tax is levied and collected, sales tax returns and payments must be filed and paid.
- Note that there are many cases where sales tax registration must be done even if a zero return is filed.
- Please note that selling on Amazon or eBay, or selling on Shopify, etc., using a local warehouse (such as an FBA warehouse) will in many cases trigger local sales tax registration and filing obligations. Also note that states where the Marketplace Facilitator Act does not apply.
- Please note that just because Amazon is a marketplace facilitator as defined by the Marketplace Facilitator Act does not eliminate your company's nexus, nor does it eliminate your sales tax reporting obligations.
- Please note that if you ask Amazon to collect on your behalf, they will charge you a fee of about 3% of the sales.
In addition to our U.S. sales tax advisory services, we also have a compliance practice that handles sales tax registrations and sales tax returns. Sales tax advice is very complex. We look forward to providing you with our advisory services.
(Article) Sales Tax Forgiveness
(Our Service) U.S. Sales Tax Consulting
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.
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