How can Chinese cross-border sellers operating in the US market achieve tax compliance? As a tax expert of Sand Star Cross-border, our tax agent has exclusively compiled the most detailed U.S. tax compliance manual for cross-border e-commerce sellers according to the special circumstances of cross-border sellers! Because of the large amount of content, we divide it into two updates. Personal Income Tax Rate and Taxable Income Under the U.S. Income Tax Act, U.S. citizens and resident aliens are required to pay federal personal income tax in the U.S. on worldwide income at progressive rates ranging from 10% to 39.6%. Nonresident aliens are required to pay federal personal income tax at progressive rates ranging from 10% to 39.6% on their U.S. source income that is actually related to business activities in the United States, and on their U.S. source investment income (such as dividends, interest, etc.) or rent, etc.) are subject to federal withholding tax at a rate of 30%. In order to avoid filing personal income tax, Chinese companies generally choose to declare corporate income tax in the form of LLC-Ccorporate. tariff All goods imported into the United States must be classified as taxable goods or
exempted goods under the China-US Tax Treaty and Mutual Agreement Procedure 63 according to the classification rules of the Harmonized Tariff Schedule of the United States. Tariff rates are classified into ad valorem rates, specific rates or compound rates, with ad valorem rates generally ranging from 0% to 20%. The tariff rates applicable to taxable goods vary according to the type of goods and the country of origin. Except for specific categories of goods, imported goods should be separately marked with their country of origin. Preferential tariff rates may apply to certain categories or subcategories of imported dutiable goods originating in a contracting country under trade
agreements and other special agreements between the United States and certain countries that meet certain conditions. For example, under the North American Free Trade Agreement, goods originating in Canada or Mexico can be subject to broad tariff preferences. Also, imported taxable goods can be stored in a bonded warehouse or in a U.S. foreign trade zone for up to 5 years without paying duties. In addition, goods processed and re-exported in the foreign trade zone can also be exempted from customs duties, and some temporarily imported goods (such as laptops carried by individuals traveling to the United States, product samples used by sales staff, etc.) can be temporarily
exempted from tax Customs clearance system (the ATA Carnet system). City Tax and Tax on Transport Revenue Some places will levy a city tax and a transportation income tax on businesses that sell remotely, that is, when calculating the sales tax, you need to add the sales tax to the shipping costs incurred. Q & A 1. We currently do not have a main company in the United States. We sell to the United States through an independent website. Do we need to pay taxes to the United States? A: There are the following situations: Situation 1: The independent station does not have a third party, FBA or its own warehouse in the United States, and if it is completely self-delivered, and the sales or/and the number of transactions sent to each state does not exceed the corresponding limit, there is no need to represent it. Sales tax is collected, so there is no need to declare;
Situation 2: The independent station does not have a third party, FBA or its own warehouse in the United States. In the case of completely self-delivery, if the sales or/and the number of transactions sent to a certain state exceeds the corresponding limit, it needs to be in the state. Filing and paying sales tax; Situation 3: The independent station has a third-party warehouse, FBA warehouse or its own independent warehouse in the United States, then the customer first needs to collect and declare sales tax at the location of the warehouse. If the goods sold to other states exceed the corresponding limit, it also needs to be States that exceed the limit report and pay sales tax. 2. To apply for a US EIN tax number, do you have to register a main company in the US? Can a Chinese company or a Hong Kong company apply for an EIN account in the Federal District? A: You do not need to apply to become a US company. You only need to provide the relevant information of the Chinese company and the US address (we can provide it) to apply for a federal EIN tax ID, and then use the EIN number to go to the corresponding state to apply for a state tax ID. 3. What is the statute of limitations for each state to apply for a state tax
number? How long does it take to receive a tax ID number? A: Generally, it takes 1-2 weeks to apply for an EIN number. It also takes 1-2 weeks to apply for a state tax number. The specific state is different and there will be differences. 4. What is the method of paying tax? Pay monthly or quarterly? Based on what? A: The specific situation depends on the state you sell to, and each state has different tax requirements. It can be roughly based on the following as a reference: 1) l less than $15 a year 2) Less than $1300 per quarter 3) $1300 or more needs to be paid every month 5. Do Chinese companies need to declare corporate income tax when selling goods in the United States? A: Whether it is an independent website seller or a platform seller, as long as it has sales in the United States and generates income, it is necessary to declare corporate income tax to the federal and local governments. However, in view of the bilateral tax treaty between China and the United States, if the relevant income has been declared and paid in China, the corresponding tax payment certificate should be provided to the United States to apply for tax exemption.