eCommerce Taxes & RegulationseCommerce Regulations & Taxes
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eCommerce Taxes & Regulations Overview
The same rules, customs regulations and licensing, duties and taxes apply to ecommerce as they do to “traditional” exporting. There is no legal difference between ecommerce and other transactions. Some countries may have duties structures based off of geography and industry, and some countries impose strict ecommerce-specific Consumer Data Privacy Laws.
The Federal Trade Commission (FTC) is the primary U.S. federal regulator of ecommerce activity, and has created resources for U.S. businesses to help you better understand ecommerce topics and issues.
Currently the ecommerce-specific regulations affecting U.S. exporters involve consumer privacy
The International Organization for Economic Cooperation and Development (OECD) has recently issued their recommendation for ecommerce best practices guidelines to help you understand consumer privacy compliance, which focuses on:
- Company/Site Transparency
- Marketing Practices
- Online Disclosures
- Confirmation Process
- Dispute Resolution
The European Union’s General Data Protection Regulation (GDPR), or Regulation EU 2016/679, focuses on strengthening and unifying data protection for all individuals within the EU. Collecting any consumer information, including email inquiries, from the EU means that the GDPR applies to you. Penalties for violating the GDPR are heavy, and enforcement of the regulation began May 25th, 2018. It is recommended that businesses selling online to the EU obtain legal counsel to prepare beforehand.
In advance of the GDPR, the US and EU created the Privacy Shield Program which is a voluntary, self-certification of “adequate privacy protection” of EU consumer data protection requirements. This is a commitment enforceable under U.S. laws, with clear compliance guidelines, and is cost effective with small and medium-sized businesses in mind.
Watch a pre-recorded webinar (May 22, 2018) on the GDPR and Privacy Shield program by registering on this page.
eCommerce Duties & Taxes
You should already understand that your domestic sales tax is based off of a “sales tax nexus”, or the significant connection to a state, and you must pay sales tax on all ecommerce purchases in the U.S.
Customs Duties and Value Added Tax (“international sales tax”) differ from country to country, and must also be paid on ecommerce transactions. Customs Duty Rates by Country apply to shipments, and are based off of your HS/Schedule B number, and you can estimate your foreign duties here. Value Added Tax (VAT), can be looked at as similar to international sales tax, and also varies depending upon the individual country. Information on EU member states VAT rates with exclusions can be found here.
It is intended that the cost of the VAT be passed along to the consumer, even if selling through an online marketplace, you the US company must register for VAT in the country of import and charge the tax to the customers.
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