With the continuous development of the industry, more and more companies choose to set up overseas structures to conduct international trade business, and localized store operations are a very common way. Localized operations help to build the brand’s international influence and facilitate cross-border trade and overseas IPOs.
Overseas investment is a trend, but domestic companies also face many problems and challenges in the process of docking with internationalization. Whether it is the overseas investment environment or related policies, legal risks and tax risks, there are deviations in understanding and cognition. Among them, cross-border taxation is the top priority, but this is a problem that companies must face and solve
Before companies invest overseas, they must do the following two things:
① Understand the registration status and tax costs of various countries or regions;
② Choose the country of registration and handle overseas investment filing (ODI filing).
International taxation-the United States
As the birthplace of the Amazon platform, the United States has a very large e-commerce traffic on the Amazon US site, accounting for half of the traffic on the Amazon platform, which is very conducive to localized operations. Therefore, the United States is a popular investment country for domestic companies to invest overseas.
The taxation feature of the United States is decentralization, which is divided into federal, state and local. Tax collection is also divided into federal taxes, state taxes and local taxes. Federal taxes are collected by the U.S. federal government, and state and local taxes are collected by state and local governments.
The types of taxes collected by the federal government include: personal income tax, corporate income tax, minimum tax, capital gains tax, personal holding company tax, social insurance tax, accumulated income tax, windfall tax, self-employment tax, unemployment tax, consumption tax, occupational tax, automobile special fuel sales tax, equipment and service tax, seabed mineral mining tax, environmental rights, tobacco tax, alcohol tax, estate tax and gift tax, stamp duty, tariffs, etc.
The types of taxes collected by state governments include: state corporate income tax, state personal income tax, sales tax, estate tax and inheritance tax, motor vehicle license tax, etc., among which sales tax is the main tax and occupies the most important position in the entire state tax revenue.
The types of taxes collected by local governments include: local sales tax, personal income tax and property tax, etc. Although there are many types of taxes in the United States, not all taxes need to be paid by enterprises. Generally, enterprises need to pay federal taxes, state taxes and sales taxes, and the taxation policies of each state are different. Some states are exempt from state taxes, while others are not.
Federal tax is the general term for the central taxation of the Internal Revenue Service (IRS). Since 2018, the federal income tax has been adjusted to 21%, which is similar to the domestic corporate income tax. It is taxed based on the profits of the enterprise. If the enterprise has profits, it must pay taxes, and if it has no profits, it does not have to pay taxes;
State tax usually refers to state income tax, which is levied based on the profits of the enterprise. Sales tax is similar to the domestic value-added tax. It is pass-through and borne by consumers. For example, when Amazon sells goods, in addition to collecting the goods payment from consumers, it also collects sales tax from consumers (for states that are subject to tax, except for sales tax-free states). Tax information will be reflected in the market withheld tax item in the platform sales report. Companies do not need to pay sales tax, but they need to declare it. Every year, Amazon will provide a 1099-K report to the US Internal Revenue Service. If the IRS finds that the information reported by the company is inconsistent with the information on the 1099-K report, it will notify the company to review it.
The abbreviations of each state in the United States and state tax rates in 2023.
If a company has employees in the United States, it also needs to withhold and pay the “five insurances and one fund” for the employees. Every year, it needs to provide employees with a W-2 form, which is a salary status form. The W-2 form will reflect the employee’s salary income and the withholding of various taxes and fees, including: salary income, federal income tax, social security wages, social security taxes, medical insurance wages, medical insurance taxes, and state and local taxes and fees.
Personal income tax is also an important source of fiscal revenue for the United States. The US personal income tax is progressive in proportion to the tax rate, with a tax rate of 10% to 37%. The declaration categories are divided into single declaration, joint declaration of husband and wife, and declaration of head of household.