Introduction

As an overseas business, expanding into the US market can be a thrilling venture, but it comes with complex tax obligations. Regardless of your business structure, industry, or location, you will be required to pay taxes in the US. In this blog, we'll delve into the intricacies of US state tax, digital goods tax, and international VAT tax, emphasizing that tax compliance is unavoidable.

US State Tax

Every US state has its unique tax laws, and as an overseas business, you will be required to pay state taxes in various jurisdictions. Some states impose taxes on foreign corporations, while others exempt certain types of businesses. However, it's crucial to understand that even if your business is exempt from state taxes, you may still be required to file tax returns and pay other types of taxes.

Digital Goods Tax

The sale of digital goods, such as software, software licenses, ebooks, and music, is subject to tax in most states. Some states tax digital goods at the same rate as physical goods, while others impose a slightly lower tax rate. However, it's essential to note that even if your digital goods are in the lower category from state taxes, you may still be required to pay federal taxes on your digital goods sales.

European Union VAT Tax

The EU imposes a Value-Added Tax (VAT) on digital goods and services, and as an overseas business, you will be required to register for a VAT ID and charge VAT on sales to EU customers, and even to some us customers if they have businesses that also sell to the EU. Additionally, you may also be required to pay VAT on sales to US customers.

Canadian Tax Requirements

If your business has a nexus (connection) to Canada, you may be required to pay Canadian taxes on sales to US customers. This includes GST (Goods and Services Tax) and HST (Harmonized Sales Tax), which are applicable in participating provinces.

Conclusion

In conclusion, as an overseas business, you will be required to pay taxes in the US, regardless of your business structure, industry, or location. It's essential to understand the specific tax requirements for each state and country to ensure compliance and avoid penalties. Failure to comply with US tax laws can result in fines, interest, and even legal action. Consult with a tax professional or accountant to ensure you're meeting all tax obligations and avoid any potential issues. Remember, tax compliance is not optional, and it's crucial to prioritize it to ensure a successful expansion into the US market as a new overseas business.

How can PCH Gateway help?

At PCH Gateway, we understand the ultra complicated world of taxation, and because we've been doing it so long we have inroads into many US Banks to help with the process and get you the lowest exchange rates. PCH Gateway manages the headache that comes with overseas businesses selling into the US, and lets you focus on all the benefits that come with your new overseas business, such as more profit, expanded audience and marketplace, and the anonymity and protection that came with your overseas business. 

Using an overseas business to sell into the US is a great choice, as is partnering with an experienced Gateway such as PCH Gateway.