Selling online into America could become significantly more
complex for Australian retailers following the passing of a bill
earlier this month which gives the states of America the power to
collect sales taxes from out-of-state retailers (as currently, the
US only collects from operations within each state's borders).
The bill has passed through the US Senate but does face a second
test in the US House of Representatives, however, in a bid to
protect traditional bricks-and-mortar retailers the US state
governments have a clear mandate on making this bill a reality.
In Australia, online purchases under $1,000 do not pay GST. This
American bill, however, has no minimum purchase limit, provided
online retailers have a turnover of more than $1?million in the
In addition to the tax, the level of administrative complexity
for Australian online retailers with operations in the US will
increase significantly as each US state has different tax laws.
This will mean online retailers will need to know the city and
state where each of their US customers reside so that customers are
levied with the correct amount of tax for their specific situation,
otherwise retailers risk paying the tax themselves. The US
landscape is currently made up of 50 different state tax regimes,
with roughly 7,700 separate imposts underlying them, presenting a
highly complex tracking process.
Under the current bill, states will be required to provide
merchants with free software to help online sellers calculate sales
taxes, and they will also need to designate a single office within
each state to handle all out-of-state tax collections so that
retailers don't have to remit to individual counties or
This sounds fine in theory, but in reality this is a highly
unworkable solution and will result in large compliance costs for
With this new tax looming on the horizon a lot of Australian
retailers who were keen to move into the US due to its larger sized
market and lower costs of doing business will see this as a
This may only be the tip of the iceberg as governments both at
home and abroad are re-examining their tax base and looking for
means to generate greater receipts, as revenue bases are
Please note, our advice outlined above is general in nature and
does not take into account individual circumstances and is current
at the time of writing.
China has released regulations to reconstruct how it taxes goods sold on its highly popular e-commerce platforms.
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