The situation for retailers shipping to states where they have no physical presence reminds me of the situation of foreign retailers with significant online sales to customers in the EU.
In each case, the seller (who has no physical or other presence in X) is required to collect tax from the buyer (a resident of X) and remit it to the tax authorities in X.
The tax is owed by a resident of X, to the tax authorities in X. But the tax authorities in X want someone outside X to collect it on their behalf.
EDIT: According to Wikipedia, some states charge sellers sales tax, and others do it the way I assumed (tax is charged to buyers, but collected by sellers).
That is the price of doing business with customers of the EU, similar to how you must comply to EU regulations if you want to sell physical goods. In return, you get access to the EU market and can deal with a single ruleset for the whole EU instead of each country individually.
Also, this is only for consumers, to business customers you can reverse-charge the VAT so they have to handle it.
Anything can be construed as 'the price of doing business'. If the EU instead required every retailer with at least one customer in the EU to get a tattoo of the EU flag, in return for getting access to the market, would you also consider that just 'the price of doing business'?
My objections to this are:
- If an EU country is owed tax by people resident within its borders, then perhaps the country's tax authorities should arrange for it to be collected, rather than relying on some foreign entity (e.g. Chinese company) to collect it.
- There are ~200 countries in the world. Should any company who wants to sell over the internet need to know about the sales tax or VAT registration thresholds in each of those countries? If so, this gives a huge advantage to large retailers over small ones.
> - If an EU country is owed tax by people resident within its borders, then perhaps the country's tax authorities should arrange for it to be collected, rather than relying on some foreign entity (e.g. Chinese company) to collect it.
As far as my experience goes, that is the case when seller is outside of EU. Buyer needs to pay customs the taxes on the item. In Finland it's common that when package outside of EU arrives in Finland, customs will hold and send buyer a message to declare item and pay taxes on it, especially if the value was declared on it (though they won't tell you what value was declared on it which can get tricky with things such as mixed electronic & physical goods on Kickstarter). It has it's own share of problems, like that buyer needs to figure out the TARIC code of the item (which are extremely specific, like "Waterproof footwear with outer soles and uppers of rubber or of plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes - Other footwear - Covering the ankle but not covering the knee - With uppers of plastics").
Within EU it used to be that seller collected local VAT if their sales didn't exceed certain threshold to the buyer's country (100k IIRC). There has been some talks about modifying it so that seller would always need to collect buyer country's VAT, but I don't remember what is the current state of it is.
> If an EU country is owed tax by people resident within its borders, then perhaps the country's tax authorities should arrange for it to be collected, rather than relying on some foreign entity (e.g. Chinese company) to collect it.
That's the case, no? When I order stuff from AliExpress, the seller's only responsibility is to declare the item value honestly, it's then up to the carrier and local customs to charge VAT, import duties and fees.
Business whine a lot, but if the tax authorities actually stopped every package, analyzed it, calculated the tax and then charged the tax plus the cost of this whole process, the final cost to the consumer would skyrocket, they would stop buying online, and those businesses would go bankrupt.
Online business already have a bunch of advantages over brick-and-mortar, having to keep a database of VAT rates, and then generating a report and sending a few bank transfers is not that onerous in comparison.
In each case, the seller (who has no physical or other presence in X) is required to collect tax from the buyer (a resident of X) and remit it to the tax authorities in X.
The tax is owed by a resident of X, to the tax authorities in X. But the tax authorities in X want someone outside X to collect it on their behalf.
EDIT: According to Wikipedia, some states charge sellers sales tax, and others do it the way I assumed (tax is charged to buyers, but collected by sellers).