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 Collecting Sales Tax
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Starting Member

1 Posts

Posted - July 18 2005 :  16:08:57  Show Profile  Reply with Quote
My company is based in Nevada and we sell and distribute our products world wide. How should we be collecting taxes for the different countries and provinces or states for each country?

Secondly, are we expected to register in all these different countries that we ship product to? If so, is there any companies out there that specialize in this tyoe of service

Any suggestions or referrals to a good ecommerce tax accountant would also be appreciated.


VP-ASP New User

152 Posts

Posted - July 18 2005 :  18:27:14  Show Profile  Reply with Quote
The best agency to ask this kind of question is Board of Equalization so that you can be directed with a correct answer.

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VP-ASP Super User

254 Posts

Posted - July 19 2005 :  00:10:07  Show Profile  Reply with Quote
In the U.S., there is no concern over any sales tax, except to those orders that are from within your state. So, the entire world can order from you, tax is not an issue for you at all, except for orders from Nevada. You do need to collect and pay sales tax for Nevada customers.

Taxes/Duty are the responsibility of the recipient. This can get pretty stiff for some folks, and it varies from country to country (obviously). Our northern neighbors (Canada) must pay a GST tax, plus a Province tax, and our Canadian customers also complain that they are hit with a fee by Canada Post, their mail service.

Best to make a disclaimer on your site, that all duties/taxes are the responsibility of the customer.

One item we sell is piano benches. These can be as high as $600 - $800 items for grand pianos. In some countries, e.g., Japan, a piano bench is considered furniture and for some reason furniture is exempt from import duty. Lucky! In other countries (Europe), there could be a tax as high as 15% or more, as the scale is sliding based on value imported.

Another example is sheet music. In many countries, sheet music is considered "educational materials" and is duty-free for import. In other countries, it is grabbed by Customs for duty, not considered "educational" at all, and the duty is based on the value of the order.

The U.S. gov't has looked into this for years, and odds are that at some point in time, Internet businesses will end up paying some sort of tax, since States are screaming about lost revenue to Internet sales. The good news is that all states are inefficient bureaucratic messes, as are all countries, so the bottom line is we're safe from being targeted for taxes, unless they figure out a efficient means to track/collect these taxes.
Canada initiated their GST tax years ago, but it has only been in the past couple of years that customers tell me their orders have been intercepted by Customs (maybe due to 9/11 anti-terrorist funding increases in Customs agencies overall). Point is, for years there was suppose to be a tax/duty collected, but the government could not hire enough people to collect what was due, because hiring enough people to implement the law adequately would cost more than the revenue bought in by the tax! Typical government - the implementation costs more than the tax generates.

Sorry to go off on an anti-government rant. But you understand, I am an American, so it's kinda my job in a way. . . (grin)

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