Understanding Ecommerce Tax Obligations

European small businesses sold €40 billion through Amazon last year. That's a milestone worth celebrating, but that number could be significantly higher. The challenge is that the EU's current VAT "deemed supplier" regime allows Amazon to collect and remit sales VAT for non-EU sellers, but excludes European sellers entirely. That means a seller from the U.S. gets the heavy lifting done for them, while an EU seller single-handedly has to remit the VAT to the relevant governments in all EU countries where they are selling products. The irony is hard to miss -- rules designed to bring non-EU traders into compliance have inadvertently made it easier for them to sell into Europe than for European businesses themselves. This asymmetry also opens the door to fraud. We've seen some non-EU traders falsely claim to be established in the EU to sidestep the deemed-supplier obligation and avoid paying VAT entirely. The EU VAT gap now exceeds €100 billion. But the fix is remarkably simple and practical: extend the deemed supplier mechanism to all sellers, regardless of where they're established. This would require no new IT infrastructure, no new reporting systems, and no additional enforcement burden. The systems are already built and fully operational to level the playing field, collect more revenue, and reduce complexity for the SMEs that are the backbone of the European economy. The European Commission has shown receptivity, but progress requires political will from member states. Governments that believe sheltering domestic sellers behind regulatory complexity protects competitiveness are miscalculating -- it puts their own small businesses at a disadvantage. We consider ourselves an advocate for the more than 100,000 EU sellers whose goods move through Amazon every day. Getting these reforms across the line is the work. Learn more about my call to improve VAT rules here: https://lnkd.in/g-m5sW6v

Booming sales on e-commerce is one thing. Staying GST-compliant is another. This handbook answers the real questions every e-commerce seller, operator, and startup asks but often too late. This Handbook provides comprehensive guidance on critical aspects such as registration requirements for e-commerce operators and suppliers, compliance obligations and recent amendments impacting digital trade. In simple terms, it covers: -->What counts as e-commerce under GST -->Different e-commerce business models -->Who is liable to pay GST -->Whether GST is payable by the seller or by the platform itself, especially in cases covered under Section 9(5). -->Tax Collection at Source (TCS) -->Registration requirements When registration is mandatory, special cases for small sellers, and compliance for unregistered suppliers supplying through platforms. -->Return filing and disclosures -->How transactions must be reported in GSTR-1, GSTR-3B, GSTR-8, GSTR-9 and GSTR-9C by both sellers and e-commerce operators. --> How mismatches in reporting, TCS errors, or wrong classification can block cash or create future liabilities. -->Penalties, interest, and consequences of non-compliance --> What happens if TCS is not collected, returns are not filed correctly, or incorrect supplies are allowed through the platform. And much more. The Institute of Chartered Accountants of India (ICAI) #ca #icai #handbook #knowledgesharing

SKIMS recently paid a $200K civil penalty in New Jersey tied to how product taxability was applied. Cases like this rarely announce themselves early. Most large e-commerce brands run into trouble because a rule that feels correct gets applied broadly and assumed to hold everywhere. Product taxability varies by state and sometimes by city. Exemptions change and jurisdiction boundaries shift. What works cleanly in one place quietly fails in another, and nothing looks obviously broken because customers continue paying tax and returns continue getting filed. Over-collection hides especially well. Money is remitted and no one internally feels pressure to investigate further. The issue usually surfaces later, often when an auditor starts looking for patterns rather than isolated incidents. At that point, the scope widens quickly. One configuration issue turns into exposure across multiple states, a single notice becomes a lookback, and the financial impact compounds in ways that are difficult to unwind. Modern sales tax can no longer be treated as a static setup or something that gets reviewed periodically. The rules change too often and the surface area is too large. Accuracy now depends on real-time tax logic, continuous rule updates, jurisdiction-level precision, and filings designed to stand up under audit without manual cleanup. Collecting tax on its own no longer signals compliance. Over-collection remains one of the quietest ways companies lose money because it feels safe until it fails under scrutiny. This is the reality e-commerce finance teams have to design for as they scale.

The E-Commerce landscape in Vietnam continues to evolve quickly, with regulation of the space is catching up with realities of technology and consumption shifts. In coming months we will see: 💵 The removal of the VAT exemption for imported items through e-commerce/express delivery channels worth less than 1m VND (~USD40) commencing February 18, 2025. Although an administrative pain, this will ensure that imported products are not more favourably priced than local products on the platforms. Further, it broadens the tax base on domestic consumption which is important as consumption patterns shifts and importing goods (via the e-commerce platforms) has become the norm. https://lnkd.in/gmR6MtAV 💰 E-commerce platforms will have to withhold and declare taxes on behalf of non-incorporated vendors (ie, individuals and business households) from 1 April 2025. This will assist in ensuring the movement towards e-commerce does not erode the tax base and that all vendors are on the same footing, without the administrative burden of the tax authorities of following/chasing individual vendors for their tax remittances. https://lnkd.in/gH5h7yaE These changes coming in 2025 follow other recent changes in regulating and registering foreign e-commerce platforms in Vietnam (ie, Temu…which came and went with a bang in Vietnam…. will it come back?), facilitating online tax payments and declarations for foreign e-commerce platforms, and notifications of vendor tax IDs and tax information to the tax authorities by domestic platforms. The data that the Vietnamese authorities have on online vendors, and the ability to tax all transactions, changes the landscape – something that is not possible to easily achieve for traditional sales channels (physical markets, online forums etc). Expect more policy changes based upon this data to come quickly.

🌍📦 Good news for EU sellers: The playing field is finally leveling up! 🚀 If you’ve been battling ultra-cheap imports undercutting your prices, there’s a major shift underway. The EU is cracking down on platforms like Shein and Temu, targeting unfair practices that have long created an uneven playing field. For European sellers, this could mark the start of a more balanced and fair eCommerce landscape. Here’s what’s happening: ✅ Revenue tax: Platforms generating significant sales in Europe will now face a tax on their revenue, ensuring they contribute to local economies. ✅ Handling fees per shipment: Ultra-low-cost imports will be less competitive as handling fees are applied to every item shipped into the EU. ✅ Stricter customs checks: No more bypassing VAT or sneaking in substandard goods—every package will face greater scrutiny. ✅ Consumer protection enforcement: The EU is also investigating platforms like Temu for misleading discounts, fake reviews, and unclear return policies. For EU sellers, this is a game-changer: Leveling the price gap 📣: With the added costs for non-EU platforms, your products will be more competitive. Boosted trust in local sellers 🤨: Consumers are increasingly favoring quality, transparency, and ethical practices. A chance to stand out 💃: By aligning with EU standards and highlighting sustainability or local production, you can capture this growing demand. This isn’t just about rules, it’s about rebalancing the market. European businesses have long been held to higher standards, from product safety to tax compliance. With these changes, we’re moving toward a marketplace where trust, quality, and fair competition take center stage. The takeaway? This is your moment to shine. Focus on what sets you apart—whether it’s sustainable practices, locally made products, or a great customer experience. The market is shifting, and EU sellers are in the spotlight. #ecommerce #marketplaces #faircompetition #EUbusiness #sustainability #digitalcommerce #sellersupport

Hello Everyone Selling through E commerce sounds easy however the Accounting, GST (GST TDS ) and TCS (194 - O) implications are sometimes very confusing and complex to understand. So, here is the quick guide for "sellers" selling through E commerce. 1️⃣ ACCOUNTING FOR E-COMMERCE SALES: Revenue Recognition: Record revenue when control of goods is transferred (i.e., when the order is delivered). Deductions by Platforms: E-commerce platforms deduct charges like: ✅ Commission Fees ✅ Logistics Charges ✅ Advertisement Fees ✅ TCS (GST) ✅ TDS (Income Tax) 💡 Example: You sell a product for ₹10,000. Amazon deducts ₹1,000 (commission), ₹500 (logistics), and TCS @ 1% (₹100). You receive ₹8,400 in your bank account. But you must record full ₹10,000 as sales revenue, and expenses separately. 2️⃣ GST ON E-COMMERCE SALES 📌 GST Registration: ✅ Mandatory for sellers on e-commerce platforms (even if turnover is below ₹40L). Except for those covered in 9(5). 📌 GST on Sales: ✅ You must charge GST on every sale. ✅ File GST returns (GSTR-1, GSTR-3B) to report sales & claim Input Tax Credit (ITC). Except for services covered in 9(5) where e commerce operator pays tax. 📌 TCS (Tax Collected at Source) – 1% GST ✅ E-commerce platforms deduct 1% GST (0.5% CGST + 0.5% SGST or 1% IGST) on every sale. ✅ This amount appears in GSTR-2A, and you can claim it as a credit while filing GST returns. 💡 Example: Sales = ₹10,000 GST @ 18% = ₹1,800 Platform deducts TCS @ 1% = ₹100 You pay ₹1,700 GST after adjusting TCS. 📌 Claiming GST Input Tax Credit (ITC): ✅ You can claim ITC on platform fees, ads, packaging, and logistics GST paid. 3️⃣ TDS (INCOME TAX) ON E-COMMERCE SALES: 📌 TDS under Section 194-O (1% Deduction) ✅ If your sales on an e-commerce platform exceed ₹5 lakh in a financial year, the platform deducts 1% TDS before paying you. ✅ This TDS appears in Form 26AS, and you can adjust it while filing your ITR. 💡 Example: You sell ₹6,00,000 worth of goods in a year. Flipkart deducts TDS @ 1% (₹6,000) before paying you. You claim this ₹6,000 as a tax credit while filing ITR. 📌 TDS on Commission Paid to the Platform (Section 194H) ✅ If you pay commission separately to the platform, you must deduct TDS @ 5% and deposit it with the government. 4️⃣ FILING & COMPLIANCE CHECKLIST FOR E-COMMERCE SELLERS: ✅ GST Returns: GSTR-1 (monthly/quarterly), GSTR-3B (monthly), GSTR-9 (annually). ✅ TDS Filing: Claim 1% TDS deducted by platforms while filing ITR. ✅ Bookkeeping: Maintain records of sales, platform charges, GST ITC, TCS, and TDS. Follow for more !

Over the last quarter, 20+ businesses have come to us for guidance after receiving noticed for sales tax audits. This isn’t a coincidence. Sales tax audits are increasing, especially within e-commerce. States are increasing their efforts to find non-compliant businesses. It's been almost 7 years since the Wayfair decision, and states aren’t as lenient as before. Audit task forces are growing in high-population states like California, Texas, and Illinois. And since sales tax revenue funds budget items, states have a vested interest in closing the gap between the taxes owed and the taxes paid. Pre-audit questionnaires are also becoming more common. States are sending them to businesses, even if they haven't registered, requesting up to 3 years of sales data. And on top of all this, states are working together—sharing business information, making it easier to find non-compliant sellers. So if you’re non-compliant in one state, you may be caught by another. Staying compliant across every state you sell in is more important than ever. You might be subject to an audit if:  → You've failed to register and remit sales tax → You report high amounts of sales tax immediately after registering → You're connected to other vendors or customers being audited The penalties for non-compliance are high and getting stricter. In some states, penalties can be as high as 39% of taxes owed. My advice to ensure compliance: 1. Stay on top of it—once you’ve reached the nexus threshold in a state, register and file.  2. Partner with an expert or use sales tax software to help you keep track of changes. 3. If you’ve been non-compliant for some time, a Voluntary Disclosure Agreement could help reduce penalties and liability. States aren’t playing around, and they will come knocking. The cost of non-compliance far outweighs the effort of staying on top of your sales tax obligations. If you have any questions about staying compliant, shoot me a message—happy to help.

States are starting to tax eCommerce deliveries, calling it a "Retail Delivery Fee" (not just sales tax). Gas tax revenue is flat and no one wants to raise gas tax rates, so states have come up with a new way to raise money to fix roads, the "retail delivery fee". Details vary by state, but the fees are typically: 1. A flat rate per order, not per delivery. So, if it takes 3 shipments to deliver a single order, it's still only one fee. 2. <$1 per order. MN is $0.50, CO is $0.29 3. Exempt small sellers (if sold directly). Thresholds vary by state, but exempt the smallest sellers from having to deal with the fee. If you're selling through a marketplace though (like Amazon, Etsy, etc.), the marketplace must collect the fee, no matter the size of the seller. 4. Exempt pickup orders. Fees generally only apply if the item is a delivery 3. Not refundable. Unlike sales tax, if an order is returned, you can't claim a refund on the fee. Colorado and Minnesota have enacted these fees already. Illinois and New York have proposed them. Legislators seem to like them because they don't raise direct taxes on consumers, but are obfuscated in retailer checkout pages as part of "taxes". In terms of encouraging less deliveries, I don't think this approach will be successful. The fees don't actually apply per delivery, so it really seems to act like another sales tax. Maybe if they were much larger, the fees would encourage consumers to consolidate orders since it's a per order fee, but I think it would need to be much higher to drive that behavior. https://lnkd.in/gTpSByBV

📕ICAI Releases "Handbook on E-Commerce Operators under GST" A timely guide for compliance in India’s growing digital economy In a significant step towards strengthening GST compliance in the rapidly evolving digital economy, the Institute of Chartered Accountants of India (ICAI) has released a comprehensive publication titled “Handbook on E-Commerce Operators under GST”. The handbook has been issued by the GST & Indirect Taxes Committee of ICAI and is updated up to 15 December 2025, ensuring alignment with the latest legal and procedural developments. 🌐Why this handbook matters? The e-commerce sector has emerged as a major growth engine under GST. However, its: 🔹Complex business models 🔹Multi-State operations 🔹Special charging provisions 🔹Frequent amendments and evolving jurisprudence have created practical compliance and interpretational challenges for businesses and professionals alike. 📚Key areas covered in the handbook: ➡️Definition and scope of e-commerce and e-commerce operators under GST ➡️Statutory framework governing e-commerce transactions ➡️Special provisions under Section 9(5) of the CGST Act dealing with deemed supplier liability ➡️Tax Collection at Source (TCS) mechanism and related compliances ➡️Registration requirements and return-filing obligations ➡️Disclosure and reporting in GST returns ➡️Recent amendments, notifications, circulars and judicial developments impacting the sector 🧩Practical insights & business models The publication explains prevalent e-commerce models, including: ✔️Marketplace model ✔️Inventory-based model ✔️Aggregator model and clearly outlines their distinct GST implications, with special emphasis on: 🔸invoicing responsibility 🔸tax payment obligations 🔸Input Tax Credit (ITC) treatment 🔸compliance and reporting requirements 🎯Who will benefit? This handbook serves as a ready reckoner for: 👨💼Chartered Accountants & tax professionals 🏢E-commerce operators & start-ups 📊Corporates & compliance teams 🏛️Regulators and policy stakeholders 🗣️ICAI reiterated its commitment to nation-building by equipping professionals and businesses with timely, structured and practical knowledge tools to navigate GST with confidence. #ICAI #GST #ECommerce #DigitalEconomy #IndirectTax #GSTCompliance #TaxProfessionals #Startups #EaseOfDoingBusiness #TCS #Section95 #ITC

Many entrepreneurs register a business entity first… and understand the tax impact later. And that single decision can quietly decide how much profit you actually keep. I’ve seen profitable businesses lose money not because of weak sales or strategy — but because the business structure didn’t align with the business model. Tax, compliance, liability, and payout options all shift depending on the entity you choose. To make this easier, I created a U.S. Business Entity Taxation Matrix (see image). It simplifies: • How each structure is taxed • Who regulates it • Which filings apply • How owners can take profits No jargon. Just clarity. A Simple Way to Think About It If you are a: Solo Freelancer / Consultant → Consider: Sole Proprietorship or Single-Member LLC If you have: 2 or more founders → Consider: Multi-Member LLC If your goal is: Tax-efficient salary + dividends → Consider: S-Corporation (Requires S-Election) If you are planning: Funding, VC, or Scale → Consider: C-Corporation (Often Delaware) If your purpose is: Social / Community Impact → Consider: 501(c)(3) Non-Profit Why This Choice Matters Your entity structure directly affects: • Your tax bill • How you withdraw profits • How investors evaluate your business • Your personal legal protection • Your annual compliance cost So the real question is not: “Which is the best entity?” The real question is: “Which entity is right for the strategy you are building?” Expert Perspective Legal structure protects your business. Tax structure protects your cash flow. Choosing both intentionally leads to smarter, cleaner, scalable growth. #USATaxation #BusinessStructure #TaxPlanning #LLCFormation #S_Corporation #EntrepreneurFinance #StartupCompliance #FinancialClarity #ForensicAccountant #ConsultingInsights #AccountingCommunity #BusinessGrowthStrategy