Tax and legal framework for overseas investment and cross-border e-commerce: from registration to operation

With the acceleration of the internationalization process, more and more companies are beginning to consider the combination of overseas investment and cross-border e-commerce. For this reason, understanding the tax and legal systems of each country has become an important step. Whether you are enhancing brand influence through localized store operations or choosing an overseas structure for international trade, you must make wise decisions based on understanding overseas tax and investment policies.

1. Overseas investment filing procedures

According to China’s “Measures for the Administration of Overseas Investment by Enterprises”, the definition of overseas investment covers a variety of situations in which assets and interests are acquired overseas through direct or indirect means, such as land ownership, natural resource development concessions, etc. Enterprises need to understand and abide by relevant laws and regulations before making overseas investments. Specific steps include:

• Submit an application form and clarify the investment entity, overseas enterprise information, investment amount, etc.;
• Pay the necessary filing materials, including application forms, contracts or agreements, and copies of business licenses.

In addition, investments involving sensitive countries or regions may require more stringent approval management.

2. U.S. tax liquidity and environment

The U.S. tax system is characterized by multiple levels of federal, state, and local taxes. Federal tax, state tax, and local tax are the main taxes that companies must face. The federal income tax rate in the United States is 21%, and state tax and sales tax policies vary from state to state. For companies operating in the US market, it is particularly important to understand the tax policies of each state. It is worth noting that as an important market for the Amazon platform, the U.S. e-commerce industry has huge sales potential.

In the course of operations, enterprises must also comply with tax reporting regulations for employees, such as filling out W-2 forms, etc., and withhold and pay relevant taxes in accordance with regulations.

3. Indonesia’s foreign investment regulations and industry restrictions

Indonesia has strict laws and regulations on foreign investment. Foreign investors need to set up a company in the form of a limited liability company, that is, a PMA company. The minimum investment standard is 10 billion Indonesian rupiah (approximately US$800,000), of which at least 25% must be paid as registered capital. Investment in the Indonesian market is also subject to the negative investment list, which defines which industries are fully or partially open to foreign investment.

4. Cross-border e-commerce independent station investment analysis

As competition in the cross-border e-commerce market intensifies, more and more sellers choose to establish independent websites to gain traffic and customers. The investment in independent stations is mainly divided into four stages: preparation stage, store preparation stage, operation stage and break-even accounting. The cost of each stage varies according to business needs. For example, using a website building platform such as Shopify can effectively reduce the initial investment and minimize it.

5. Cross-border investment and labor negotiations

Globally, cross-border investment negotiations often involve complex economic factors, including investment payback periods, interest rates, etc., while labor negotiations are usually conducted between companies and employees, covering labor conditions, wages, benefits, etc. Therefore, when making cross-border investments, companies need to have excellent negotiation skills to cope with negotiation situations in different regions and cultural backgrounds.

Conclusion

Cross-border e-commerce and overseas investment face diverse legal and tax environments. Companies need to have a true and detailed understanding of the policies of each market to ensure an advantage in global competition. Whether it is tax processing, investment filing or business negotiations, in-depth market research and compliant legal awareness are the keys to success.