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US Taxes on Online Sales on platforms

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  1. #1

    US Taxes on Online Sales on platforms

    Hi,
    It says that US does not have any tax treaty with HK so US on line selling platform will withhold 30% from individuals/businesses based in HK selling in US. However, for those based in China then only withhold 10%. Isn`t HK part of China now especially after pro dem protest when HK`s special status was removed?


  2. #2

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    Can you be a bit more specific?

    The changes were for widgets made in HK to be considered as made in China - it did not classify HK businesses as Chinese businesses, which would be a whole new can of worms given the impact on the financial sector.

    HK is viewed as a separate non-treaty entity ... politics aside, for taxation.


  3. #3

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    What does the first word of your post refer to: "It"?


  4. #4

    The help page from the online platform.


  5. #5

    Thank you, got it.


  6. #6

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    There is information missing.

    When I was selling on eBay the US VAT was added automatically (if there was one in that state).

    Anyway, I am unclear what you mean.


  7. #7

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    Quote Originally Posted by michelle1984:
    Hi,
    It says that US does not have any tax treaty with HK so US on line selling platform will withhold 30% from individuals/businesses based in HK selling in US. However, for those based in China then only withhold 10%. Isn`t HK part of China now especially after pro dem protest when HK`s special status was removed?
    I've tried to build the background (and the reasons for it). See if this is what you meant:

    If you're selling on an online platform in the US (Amazon, eBay, Shopify etc.), the sales/revenue/income is likely to be considered "US-sourced/originated" by the US tax authorities. The platforms are liable to withhold tax at certain percentages and deposit it with the US tax authorities (you can claim a refund etc. later on if you submit your tax returns/claim tax treaties etc.).

    US and HK don't have a Double Tax Treaty (DTA), therefore, 30% withholding tax rate would apply on the payments made by the online platforms to you (assuming you've given your location as HK).

    US and PRC have a DTA and therefore, payments made by the online platforms to sellers based in PRC would be subject to 10% withholding tax.

    HK is a separate/independent jurisdiction for tax purposes (yet). It has its own tax laws and still signs agreements etc. with other countries on its own.
    ndt, shri, qhank and 1 others like this.

  8. #8

    Yes, that's exactly what I meant. Sorry for being unclear. 30% is a lot. You can claim a refund even if HK has no tax treaty? To the US tax authorities? Would the refund be based on amount of profit made?


  9. #9

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    I wouldn't think it is refundable if it is anything like state-by-state sales taxes on taxable goods and services in the US. Time to set up that China joint venture. 20 banquets / hangovers later, you're in business.


  10. #10

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    Quote Originally Posted by michelle1984:
    Yes, that's exactly what I meant. Sorry for being unclear. 30% is a lot. You can claim a refund even if HK has no tax treaty? To the US tax authorities? Would the refund be based on amount of profit made?
    Claiming a refund would not be that easy. You would likely need to submit your tax return in the US, declare your worldwide income and expenses, compute the total tax payable, setoff the withholding (and other taxes) tax and see if you a) owe additional taxes to the US tax authorities or b) are eligible for a refund if you paid excess (overall) taxes (not just the 30% withholding taxes).

    In short, less than likely for you to recover that 30%. Uncle Sam thanks you!
    shri likes this.

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