With the vigorous development of e -commerce, the increase of non -border shopping, and so many different purchases The government and the type of sales products have been excluded when levying the transaction tax. In the past few years, authorities around the world have updated the law to reflect the digital economy.
Therefore, it becomes more difficult for merchants to deal with tax obligations. In 2022, greater changes are taking effect and depending on the country or region of your operation and residence, which may affect your business method.
For American companies, it is not much different from the state of the state. In fact, in many aspects, it may be much more complicated than companies in an EU country to sell products in other EU countries.
As our friends in Avalarra showed in their 2022 tax change guide, there are a lot of content to be introduced around this theme.
Therefore, in order to maintain it temporarily, we will provide you with a wide range of eight tax changes in the United States, the United Kingdom, the European Union, and many other countries and regions
. The first few mainly involved the United States and the rest involved in other countries.
1. NEXUS Law -your company is located
[[] [ [[] 123] For American companies, you must pay sales tax for clients in your so -called connected state. Similarly, this was very simple. If your office, warehouse, or other tangible states are located, then you have contact in the state. But now, because so many employees are working in long -range, many states claim that if you have employees living in it, your company will be connected.
This means that even if all your operations are in one state, you may also exist in multiple states. In addition, in addition to the existence of entities, if you sell more than a certain amount or more than a specific quantity, the state may think that you have a connection within its jurisdiction.
More complicated, some products are exempt from sales tax, and these rules in each state may be different.
In addition, after the 2018 South Dakota VS WayFair court decision, states can now levy foreign sales tax on products purchased in the state. This is to enable physical companies to compete with online companies in a more fair competitive environment. But its logistics may changeNightmare.
In some different counties, this has become more complicated. For the online business, you must find out that you have a physical or economical existence of each state (maybe county), and then calculate the sales tax you owed.
Read more information about changes in sales tax.
2. Change of sales tax rates, borders and rules
It is difficult to find out your arrears in each state. But what if the situation changes?
The government will regularly update its sales tax rate. Some taxes that have been taxed have become tax -free in some places, such as diaper and women’s sanitary products. Other items that were not taxed before, such as disposable plastic bags.
Then there is a change in temporary tax rates, such as sales tax holidays, or tax reductions that may have been implemented during the period of COVID-19. Customers like them, but it is difficult for them to conduct correct tax accounting for companies.
In addition to changes in tax rates, you must also understand the boundaries between tax jurisdictions. Some cities span two states. Many cities span two counties. Sometimes the house across the street has different sales tax rates. These boundaries sometimes change.
View more information about these and other industry tax changes in 2022. 3. Where does the customer buy and how to pay
If the customer purchases online but the goods have been delivered to the store to pick up the goods, and their residences are in different tax areas, what will happen, what will happen, what will happen? Intersection This is called online purchase, and the store is available in the store. Online sales tax may be different from the place of delivery of goods.
You need a way to track the situation of each customer’s purchase in order to ensure that the correct tax is remitted to the correct country, city, county or state.
You need to make some decisions on the sales tax for the situation of paying (BNPL) after buying (BNPL).
For example, should you collect all the sales tax of all purchasing value or shaow it into each payment? Priority means that customers do not actually pay equivalent payment. If it is scattered, what will happen if the sales tax rate changes before all payment is completed? Do you need to charge a new amount for the remaining payment? What is the cost of any BNPL charged by the service provider? Moreover, if they return the item before all payments, you have already taxed the taxWhat will happen to the government?
Each country, state and county may deal with these situations in different ways. 4. Source of sales tax
Three procurement methods of states in the United States to determine who pays the sales tax:
Destination Purchasing: Based on the location of the buyer [123 [123 ]
Origin Purchasing: Based on the seller’s position
Mixed procurement: Both of them are both
Before the emergence of Internet and e -commerce, most places used the original original original original original use Purchase of origin because it is the simplest and most meaningful. But now, because the inter -state and international trade are so many, the boundaries have been blurred, and there are many tax revenues that have not been charged from online shopping.
For this reason, many states are switching to destinations, which means that you pay taxes based on the location of the buyer. Even for small companies, if you sell products nationwide, you may have to track the purchase of customers in 50 states.
5. Digital monitoring of commercial sales transactions
In most areas of Europe and Latin America, and other regions in the world, countries are developing and monitoring all commercial transactions, so that they can collect appropriate quantities Sales tax and value -added tax.
Similar There are so many international trade between Canada and Latin America, and various forms of electronic invoices are rapidly becoming normal. 83 countries/regions have formulated some types of electronic invoices or reporting laws, and more countries are developing relevant laws. The type of digital transaction monitoring includes:
Real-time report: Report
Tax Standard Audit Documents (SAF-T): Make the authorities can easily collect tax information
[[
[ 123] Electronic invoice: The government sees the previous invoice for each invoice
Four -day invoice requirements: not as strict as in real time, but the same idea
All these systems are designed Make compliance easier, reduce errors and minimize tax avoidance behaviors. They also make audits easier and faster.
Detailed understanding of how the countries use electronic invoices for sales tax monitoring.
Therefore, if your company is engaged in international trade, you must followTax reports and invoice systems in each country.
Brexit is a good example, explaining how this might operate. Britain is now implementing a plan called \”Digitalization of Taxation\”. The plan will apply to companies in the UK and companies selling goods to them, such as any EU company. The new system is even suitable for individual business companies and landlords. EU companies selling products to the British will have to collect VAT from them. For small purchases below 150 euros, companies will use imported one -stop stores (iOSS), which is an electronic registration portal that can easily comply with VAT requirements.
For the same EU companies sold to other countries in the EU, they will use one -stop store (OSS) system similar to iOSS, but only for business within the EU.
Visiting and using all these systems will need to spend some money in advance, but it will make them easier to develop business with consumers in many EU countries.
The United States has not adopted an electronic invoice or report system. 6. Coordination system The coordination system began in 1988, but with so many digital business today, it has become an indispensable part of international business activities.
Coordination system is a method of encoding and tracking products when each industry crosses international boundaries. This will make the surveillance cross -border sales easier, so it can levy accurate value -added tax and sales tax for goods and services.
The code is updated every five years, and the seventh edition will be released in 2022.
The use of HS code will soon become complicated, because not every country will update its code immediately. Some take years. This means that you may sell the same products in two different countries/regions and must use two different code.
What will happen if the product is wrongly classified by the wrong code? It may levy taxes at the incorrect tax rate and cause fines and delays, border issues, and customer uneasiness. Read more information about the coordination system and related global tax issues.
7. Cancel the minimum tax requirements Especially in the UK and EU countries, especially The minimum requirements for when applicable to the value -added tax started beforedisappear. For imported goods entering the UK, the previous minimum order volume was 135 pounds before levying VAT. Just like the low -value consignment inventory reduction of products under 15 pounds in the past, this situation is about to end. At the time of checkout, we must collect these two VAT with customers at the sales point. There is currently no change in policies above the threshold.
For imported products entering the European Union, the minimum of 150 euros in the past is valid, and this situation is also disappearing. IOSS users will now be required to collect VAT for all purchases below the sales point to collect.
Many other countries including Canada, India, Malaysia and China are also carrying up similar tax reforms.
Other tax issues in 8. 2022 and later
Supply problem
The issue of supply and labor shortage may affect your tax situation.
For example, if so many products are purchased and then returned, how do you handle the tax collected? Do you have to modify the tax declaration form that has been paid?
Online market If you sell products one of dozens of online markets such as Amazon or Wayfair, some states and countries will tax them, and these costs may be passed on to you, and they will also be passed on. May not be passed on to you. Other states allow these types of sellers to maintain exemption. Typical product types Many countries that have been taxing for car rental services and taxis are now trying to tax on car sharing services.
If you sell online courses, these courses may also be taxed. But there are several ways to make the course different from each other. Some courses are live broadcast on the spot, while others are recorded in advance. Pre -record courses are more like a product. Other courses need to information. Some people send materials through mail.
Different countries and different places may treat these types of training and education services in different ways.
Software?
At present, there are at least ten different types of software products, such as packaging and delivery, packaging, but electronic , customization, etc. like real products. Similarly, the taxation of each type may be different, depending on your company’s determined country and region of the existence -the problem of this relationship opened at the beginning.
Require tax help? Woocommerce does not provide tax services. This article aims to provide information and help for companies trying to understand their tax compliance responsibilities. However, Avalara can help you use tax automation software to make compliance easier.Especially for small companies that develop business in the United States or cross -border, there are many things that need to be followed.Tax compliance software may be worth studying.
Check: Woocommerce AvataX expansion directly integrates Avalarra’s software directly with your store.
In addition, after the 2018 South Dakota VS WayFair court decision, states can now levy foreign sales tax on products purchased in the state. This is to enable physical companies to compete with online companies in a more fair competitive environment. But its logistics may changeNightmare. 
