Taxing question

[brutfood]

I've been developing some services which I intend to sell over the Internet. My latest information is that payment of sales TAX such as GST, VAT etc, will depend on where the site is hosted - (or perhaps where the point of sale is hosted).

To get over the overhead of paying duty - are there duty free hosting-ISPs in parts of the world where sales tax is not applicable? Any recommendations?

Perhaps only the 'enter your credit card details' point of sale need be duty free - I don't know? - Clarification? recommendations? Information? I don't have my own credit-card debit facilty - so will be using a third party service. I want to go for one, where my customers could easily set up their own accounts too.

That is, later I will be introducing a service to allow users to 'drag and drop' their own eBusiness site - and so pass on the benefits of duty-free selling to people using my online WEB site creation utilities.

Technical requirements:- Well, the front ends are written in Flash, and the back end is Perl. I will also be using PHP and mySQL. The initial service will be a free Flash WEB page creation utility to encourage traffic and boost advertising revenue. (Each users page will be described internally using small text files which reference my .swf library files). If the host was unix based then I'd be more confident about compatibilty with my development environment - but provided it's compatible, that's ok.

Geographically, I'm based in South Australia.

[1q1q1q]

Originally posted by brutfood
I've been developing some services which I intend to sell over the Internet. My latest information is that payment of sales TAX such as GST, VAT etc, will depend on where the site is hosted - (or perhaps where the point of sale is hosted).


Do you mean the tax added whenever customers buy thing in a store?

I think Hong Kong do not need this kind of tax.

[brutfood]

Yes, sales tax.

Now I found something on the net that suggested that legislation in the USA meant that selling things over the Internet was exempt from sales tax under certain circumstances. There must be loads of American's on this forum (there always are :) - Is this the case?

[Jan]

This needed to be moved, but I wasn't sure where too. But some of the business guru's that inhabit this particular forum might be better able to answer your questions :)

[Editor]

Originally posted by brutfood
I've been developing some services which I intend to sell over the Internet. My latest information is that payment of sales TAX such as GST, VAT etc, will depend on where the site is hosted - (or perhaps where the point of sale is hosted).


Geographically, I'm based in South Australia.

Regardless of where you host your site, or market your services, back here (in Australia) you are still required to apply GST to Australia clients. If someone (still talking about an Australian client here) sends you a cheque/money order, they will do so against your ABN. If someone pays you via an Australian based third party card processor, GST will come into play.

Where it gets interesting, is if you are using an overseas card processor. If I purchase something from you, and I pay via Revecom for example, then you may not necessarily have factored in GST, and when they pay you (either via wire transfer or a cheque in the mail) they wont either. When you deposit that into your business account, it really should hit your books as Non-GST sales.

[Edit: When we posed this scenario to the Tax Dept, they said that we're technically "exporting" hosting services if we use an overseas card processor. But to just use the Non-GST tax code instead.]

Because...the third party card processor is basically your "authorised retailer", so where that occurs is the point of sale. And we don't pay GST on purchases we make in the US.

Another interesting part is what if Revecom send you your cheque in your personal name, and you bank it in your personal statement account? Or yuo set your personal statement account as the recipient for their wire transfer? Does the Taxman ever know? Probably not. Are you playing with fire? Probably. If he ever does learn of it, and you haven't been declaring that as taxable income, you're up the creek. And as soon as one of those transactions amounts to $10,000.00 or more, that single transaction gets reported automatically to the Tax Dept(?? it gets reported to some body that monitors large transactions anyway).

This has probably gone nowhere near directly answering your questions, but there you have it. :)

Cheers

Gary

[brutfood]

Thanks Gary,

I think this has answered my question, but I will validate this with the TAX office anyway - just to cover myself. (Sometimes it's hard getting a straight or consistent answer from them).

So if I use a USA based card processor (revecom say) - I don't have to pay GST on these sales. I could even get my site hosted here in Australia. Good.

I only want to avoid GST. I'll pay my other taxes :)

Thanks,

Daniel

[brutfood]

Although I think that answered my original question - I just want to fill in a few gaps in my knowledge, for completeness.

1. I believe the USA has a 6% sales tax. Why is it we don't pay that if we use the third-part credit card handler in the USA. I suspect the USA has legislation that means that it is not applicable to selling online? Essentially a tax break to promote adoption of eCommerce? Is the legislation the same whether my Customer is within the USA, whatever their state, or outside the USA?

2. I've just been told by an organisation in the UK that the Internet is a special case, and no duty is charged. But I know when living in the UK, VAT is charged on Internet purchases. Perhaps (in the UK) it just depends whether you are exporting or not? I'm more confused about the legislation in the UK than that for Australia?

3. Btw: I am interested in the case where only 'data' is sold, nothing physical - although later I may introduce a service that involves shipping CDs. Are the rules different then (shipping CDs from Australia, throughout the world)?