Do i have to pay sales tax on an ecommerce business?

If I will be selling goods via ecommerce in the US(no storefront in the US) but my business is located in Latin America. Do I need to create a legal entity in the US to do so? Do we have to pay any taxes other than sales tax?

  • I will only be shipping products to clients once orders come in. So, I won't physically operate in the US at all. It will be all via our website built and maintained in latin america.

  • Answer:

    I think it's logical that he does not have to pay any income tax. The client will pay the custom duties on the products he ordered when they are shipped. In my country you pay VAT 24% for anything you order online and comes from outside the EU. But i don't know about America :)

Alexandru-Claudiu Radulescu at Quora Visit the source

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If you are selling tangible goods delivered to customers in the US, then you have what is known as Effectively Connected Income in the US and you owe US income tax.  You actually may not owe sales tax, unless you do create a US legal entity, in which case you will at least owe sales tax in the state where you incorporate.  If you are using a US based fulfillment house, there is also a possibility that you owe sales tax in any state where the fulfillment house has nexus.  That will depend on the nature of the relationship between you and the fulfillment business.

Wray Rives

You may want to establish an entity in Puerto Rico. As a US Territory they do not have an obligation to pay US Federal income tax on income effectively connected to the conduct of a trade or business there. They also have a great tax incentive program, Act 20 for Export Services, where an ecommerce business can then reduce their income tax to 4%, and distribute dividends at 0% to bona fide residents. You would likely have to host the website in PR, and have an owner/partner/employee reside there to effectively connect the income.

Edgar Hazelwood

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