The Seller Abroad

Using FBA to sell on Amazon from abroad… can't be that hard!

Tax ID… Clarified

Since publishing my post on “Dealing with Tax and Bank Settings,” I’ve received a large number of responses with further questions on both tax and banking. Let’s address tax first. Let me start by answering a couple of common questions:

Q: Do I need a tax ID?

A: If you are selling on Amazon in the US, you will need to pay sales tax. In order to register with states/territories to collect sales tax from your customer, you will require a tax ID. In order to file your sales tax return, you will require a tax ID. So in short, I’d say yes, you need one.

Q: What states/territories do I need to pay sales tax in?

A: You will need to pay sales tax for any sales made to customers within states in which you hold a Nexus. What’s a nexus, I hear you ask…. Well, a nexus is a presence in any state/territory. For our typical case of an entity set up outside the US with stock sitting in a FBA warehouse, you are considered to have a nexus in any state in which your product sits in a FBA warehouse.  Given this situation, you will need to register for and pay sales tax to any state in which a FBA warehouse holds your product.

Getting a Tax ID

So first step is to get a tax ID. I know from experience that the process of identifying and applying for the required tax ID can be painful due to the lack of clear information available. I have simplified the process by putting together a “Tax ID – Cheat Sheet”. The Cheat Sheet is a detailed walk-through to obtain a tax ID.

This Tax ID – Cheat Sheet is available as a premium post. You can check it out here 

 

Disclosure: I am not a tax advisor and the information provided is only a reflection of what I’ve learnt from my personal experience. Please do your own research and fully understand your obligations before making any decisions.

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3 Comments

  1. Sizz

    So the W-8 form is not sufficient?

    • thesellerabroad

      Hi Sizz, my understanding is that the the W-8 form is used to reduce or avoid paying withholding tax or tax on your profits in the USA. This is usually because the country you are from has a treaty with the USA so that you do not double up on paying tax. The W-8 form however does not provide a tax ID that you can use for Sales Tax purposes. Although you can avoid paying tax on your profits in the USA, you will still need to pay Sales Tax where applicable. For this, you will still require some form of tax ID. This is my take on things. Please comment if anyone has anything they can add to help further.

  2. Thanks for posting this, lots of information on getting tax ID.

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