TAX RATES

I am developing a web site with ASP.NET and C# and I need to know whattax rates should be added to theprice of aproduct so I could implement the application accordingly.

Could someone tell me if the tax rate added to the price of a product sold in a online e-commerce web site is the one existing in1) the country of theperson who bought the product,2) the country where theweb owner site resides,3) the country where theserver hosting the web site resides or4) the country where theowner registered his company ( supposing he did so ) ?

And what would be the situation if the e-commerce web siteowner works just asself-employed and did not register the web site as company ?

I am not certain how this works in the UK, but I can give you some general ideas of how this works in the US and possible applications abroad. Generally in the US, sales tax is fairly straight-forward on when to apply it:

E-commerce tax always applies to where the product is being shipped (not necessarily where the person buying the product is located). If my business is in NY, and someone in CA buys something from me, and that product is also being shipped to CA, then the sales tax that gets applied is the CA tax rate. Other applications:

1) If the person buying your product resides in the same state as your business, you charge them sales tax. Since the buyer and seller are in the same state, it is that state tax rate that gets applied.

2) If the person buying product from you lives in the same state as any of your operation locations, you charge them sales tax. If my business has locations in NY, CA, and TX, then I must charge sales tax for any product being shipped to these states. My head-quarters may be in NY, and all my product may ship from NY, but because I have operations in CA, I have to charge sales tax to anything being shipped to this state.

There is new initiatives out now that take this down to the county level. So if I am required to charge sales tax for products being shipped to CA, I may also have to determine which county in CA I am shipping to and charge the sales tax rate that is established in that specific county. So someone in northern CA may actually pay a lesser tax rate than someone in southern CA because they are in different counties, even though they both live in the same state.

So in general,tax applies to the location the product is beingshipped to, regardless of where the person buying is located. The person buying may be in CA, but if he is having the product shipped to another state that does not require me to charge sales tax, then no sales tax is applied for that order. Hopefully that makes sense.

I do not believe there are any requirements for charging a sales tax on over-seas orders, but I have not dealt with any of these scenarios in my experience. It is probably up to the country's laws that the product is being shipped to as well. In your case, if you ship from UK to the US, that order would probably be subject to US tax laws. You should probably seek a professional tax consultant on this.

You're last question is probably a gray area and I am sure there are loopholes to exploit, depending on the type of business you are and the product you are selling.

Thank youRossoneri.

It was a very informative post.