International Business
The federal tax law in the United States treats U.S. persons differently for tax purposes. Therefore, if you have foreign income or plan on doing business in the United States it is important to distinguish between these two types of taxpayers. A foreign person includes a nonresident alien individual, a foreign corporation or foreign partnership. A “United States person” means a citizen or resident of the United States, a Ciao USA Radio Italia domestic partnership or domestic corporation.
Foreign Persons Selling Products to U.S. Customers Online
Doing business in the United States as a foreign person by cross-border transactions of goods and services such as internet sales requires a foreign person to be compliant with the Internal Revenue Service. A foreign person will be taxed in the United States on two categories of income:
a) Income that is effectively connected with the conduct of a U.S trade or business (ECI) and
b) Certain fixed and determinable annual or periodic income that is not ECI to a U.S. trade or business such as but not limited to interest, dividends or rents.
Foreign persons doing business on Amazon could be subject to U.S. tax
Tax Treaties
There are over 50 foreign countries the United States has income tax treaties with. Some of these countries include Canada, Mexico, Philippines, China and the United Kingdom to name a few. The tax treaties are bilateral which promote international trade and cooperation among countries in enforcing tax laws. For example, if you are a Canadian seller of goods to the United States online, your income can be transmitted to the Canada Revenue Agency by the Internal Revenue Service. Online business transactions from outside the United States requires tax compliance. Contact Business Master to discuss United States tax compliance