Question best offshore company country for Amazon FBA USA

[ume]

Hi, smart people,

I was checking article about Amazon FBA seller in this forum but nothing really matches my case,
so I decided to make a new post.

I am Taiwanese living in Taiwan. I want to do sell goods to Amazon FBA in USA.


1, If I register as Taiwan individual seller, Amazon.com withholds 30% of gross sales, as Taiwan does not have tax treaty with USA.

https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z
This is really tough because that means Amazon withhold all of my profit margin until tax return.


2, I want to establish an offshore company to avoid withholding tax with tax treaty,
and save income tax, while remotely controlling it from Taiwan.

Here is the list of country that Amazon.com and Europe allows to make seller account.
https://drive.google.com/file/d/1X1z2e950dnRQRqw9rD3d-uDDqewhYknB/view?__s=ma1n4xqp58x639kdgpja
Taiwan is territorial tax system like Hong Kong, and Taiwanese Transfer pricing tax system is not an issue for my business size.

Here is my candidate list of country for doing offshore FBA business, considering I want to expand to Amazon Europe in the future.

Bulgaria
Cyprus
Georgia
Ireland

None of these countries have CRS with Taiwan.

3 questions here.

A, Which country has 0% or maybe 5-10% reduction of withholding tax with Amazon USA?

I checked IRS website and bunch of others but I have no idea which one I should look for selling goods in USA?

https://neillassen.com/how-to-avoid-the-30-tax-withholding-for-non-us-amazon-sellers/
https://www.pwc.com/us/en/services/...nited-states/tax-treaty-benefits-summary.html
Any of these applied to non resident amazon seller?

Dividends paid by US corporations in general
Dividends qualifying for direct dividend rate
Interest paid by US obligors in general
Royalties


B, Which country has lowest income tax rate for foreign sourced income for non-resident?

Bulgaria 0%
Cyprus ?
Georgia 5% or 10%
Ireland 12.5%


C, stability to use the same offshore scheme for many years
I have no idea about this. please give me your thoughts.


3, I read so many article about making Non resident one member LLC in USA, to evade Amazon withholding tax / income tax in USA.
Some says this is safe and other says this isn't. What is your thought about this?


https://expattaxprofessionals.com/blog/article/amazon-fba-and-us-federal-taxes-for-foreign-sellers
"
Single-member US LLC is the seller:
From a substantive tax perspective, there is some ambiguity as to whether this structure presents additional adverse tax implications. An argument can be made that the structure is not problematic because under the entity classification rules as set out in Treasury regulations, a U.S. LLC is treated by default as a disregarded entity from its owner if it has a single owner. As such, from a substantive tax perspective, the U.S. single-member LLC does not exist, and therefore its activities are considered to be the activities of its foreign owner. This position, however, is hardly free from doubt, both under domestic and treaty law."



https://onlinetaxman.com/us-llc-tax-haven-for-foreigners/

"Potential risk of LLCs for foreigners​

Be aware that applying this approach to Amazon selling uses a rather aggressive reading of the US tax code and does not come without risks.

To date, we are not aware of any court ruling against this interpretation of the tax code. However, as with any aggressive approach to tax planning, there is always the possibility that the IRS eventually rejects it."


Thank you for reading and looking forward to your comments.

Maybe Hong Kong is considered as China in US tax treaty? In that case Hong Kong might be an good option as well.

 

[longr2512]

Hi there,

I believe Hong Kong is the best choice for you. I'm a dual citizen with one of my citizenships being Hong Kong. I run my Amazon FBA business via a HK corporate entity. I also have relatives in the mainland who run their FBA business through a HK corporate entity.

Hong Kong Corporate Tax

As a corporate entity in Hong Kong, all foreign sourced income is tax-free. I issue dividends from my HK company to my personal HK bank account, completely tax free since there is no dividend tax for HK individuals. I'm not sure about TW dividend income tax.

Tax Withholding

Amazon will get you to complete the W-8BEN-E form as a non-US taxpayer entity and the HK company will be exempt from US tax reporting requirements.

I don't believe there's any withholding tax after the W-8BEN-E is completed. I just checked my selling reports and matched my payouts with my external metrics, and 30% isn't missing.

"If you’re an NRA selling on Amazon and you don’t have employees (or other service providers) in the US, you simply don’t owe any US income tax on your Amazon sales. The same thing is true if you sell on Etsy, Ebay, your own website, etc." (UStax.bz)

Searched all over online in English and Chinese and it seems like the withholding tax only applies to Amazon's other services like book publishing, affiliates etc. Amazon FBA doesn't seem to withhold anything unless you have a US linked business address.

Incorporation Costs

HK residents incorporate for cheap because they can use their own address and designated representative. For non-resident incorporation, it's going to cost you around $750. Anything higher than $800 USD is overpaying.

Annual recurring expenses include secretary, address, designated representative costs (2000-3000 HKD). And then you need an accountant for profits tax filing, and an auditor for auditing (5000 HKD).

So recurring fees are indeed quite high (1000 USD yearly), but I think it's absolutely worth it since Hong Kong is internationally recognized.

Banking

You will need to fly over there to open a bank account though. I live in another country right now and despite holding a HKID and HK passport, I can't even open an account online.

For Amazon selling, I recommend just using a PSP. I use Airwallex, it's probably the best one out there. There's also other companies like Neat, Currenxie, Statrys etc, but Airwallex seems to be the largest and lowest fees. Just make sure you get a physical account opened up in-person in the future.

Any other questions about HK or FBA, feel free to dm me, we can share ideas.

 

[ume]

Thank you for your answer, it helps me a lot.
I was also thinking HK company is the best if 30% withholding tax is not an issue.

 

[KDX]

Hi there,

I believe Hong Kong is the best choice for you. I'm a dual citizen with one of my citizenships being Hong Kong. I run my Amazon FBA business via a HK corporate entity. I also have relatives in the mainland who run their FBA business through a HK corporate entity.

Hong Kong Corporate Tax

As a corporate entity in Hong Kong, all foreign sourced income is tax-free. I issue dividends from my HK company to my personal HK bank account, completely tax free since there is no dividend tax for HK individuals. I'm not sure about TW dividend income tax.

Tax Withholding

Amazon will get you to complete the W-8BEN-E form as a non-US taxpayer entity and the HK company will be exempt from US tax reporting requirements.

I don't believe there's any withholding tax after the W-8BEN-E is completed. I just checked my selling reports and matched my payouts with my external metrics, and 30% isn't missing.

"If you’re an NRA selling on Amazon and you don’t have employees (or other service providers) in the US, you simply don’t owe any US income tax on your Amazon sales. The same thing is true if you sell on Etsy, Ebay, your own website, etc." (UStax.bz)

Searched all over online in English and Chinese and it seems like the withholding tax only applies to Amazon's other services like book publishing, affiliates etc. Amazon FBA doesn't seem to withhold anything unless you have a US linked business address.

Incorporation Costs

HK residents incorporate for cheap because they can use their own address and designated representative. For non-resident incorporation, it's going to cost you around $750. Anything higher than $800 USD is overpaying.

Annual recurring expenses include secretary, address, designated representative costs (2000-3000 HKD). And then you need an accountant for profits tax filing, and an auditor for auditing (5000 HKD).

So recurring fees are indeed quite high (1000 USD yearly), but I think it's absolutely worth it since Hong Kong is internationally recognized.

Banking

You will need to fly over there to open a bank account though. I live in another country right now and despite holding a HKID and HK passport, I can't even open an account online.

For Amazon selling, I recommend just using a PSP. I use Airwallex, it's probably the best one out there. There's also other companies like Neat, Currenxie, Statrys etc, but Airwallex seems to be the largest and lowest fees. Just make sure you get a physical account opened up in-person in the future.

Any other questions about HK or FBA, feel free to dm me, we can share ideas.

Just wondering, how did you end up with multiple nationalities including PRC (HK)? Also, what bank are you using for your HK company? Any recommendations?

Seems like HK is one of the best jurisdictions for an operations company right now..

 

[longr2512]

I'm naturally born and then immigrated. I'm not using a standard brick and mortar bank since I incorporated during Covid and have not had a chance to go back to Hong Kong. I'm currently using Airwallex, which serves my ecommerce business very well. The total fees are approximately 0.3% in, 0.3% out, depends on what you use it for and what currencies you use.

I'm planning on opening a DBS or Hang Seng business account when I get the chance to go in person.

Indeed, it is the most reputable tax-free jurisdiction I can think of right now.

 

[jadabreu]

Do you end up going with the HK company? I have been using an LLC for years but looking to move to another setup. There is minimal risk with LLCs when you have inventory in the USA (and a bank account), but still not 100% risk-free. Incorporating outside the USA is the safer option

 

[Aria]

Hi, smart people,

I was checking article about Amazon FBA seller in this forum but nothing really matches my case,
so I decided to make a new post.

I am Taiwanese living in Taiwan. I want to do sell goods to Amazon FBA in USA.


1, If I register as Taiwan individual seller, Amazon.com withholds 30% of gross sales, as Taiwan does not have tax treaty with USA.

https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z
This is really tough because that means Amazon withhold all of my profit margin until tax return.


2, I want to establish an offshore company to avoid withholding tax with tax treaty,
and save income tax, while remotely controlling it from Taiwan.

Here is the list of country that Amazon.com and Europe allows to make seller account.
https://drive.google.com/file/d/1X1z2e950dnRQRqw9rD3d-uDDqewhYknB/view?__s=ma1n4xqp58x639kdgpja
Taiwan is territorial tax system like Hong Kong, and Taiwanese Transfer pricing tax system is not an issue for my business size.

Here is my candidate list of country for doing offshore FBA business, considering I want to expand to Amazon Europe in the future.

Bulgaria
Cyprus
Georgia
Ireland

None of these countries have CRS with Taiwan.

3 questions here.

A, Which country has 0% or maybe 5-10% reduction of withholding tax with Amazon USA?

I checked IRS website and bunch of others but I have no idea which one I should look for selling goods in USA?

https://neillassen.com/how-to-avoid-the-30-tax-withholding-for-non-us-amazon-sellers/
https://www.pwc.com/us/en/services/...nited-states/tax-treaty-benefits-summary.html
Any of these applied to non resident amazon seller?

Dividends paid by US corporations in general
Dividends qualifying for direct dividend rate
Interest paid by US obligors in general
Royalties


B, Which country has lowest income tax rate for foreign sourced income for non-resident?

Bulgaria 0%
Cyprus ?
Georgia 5% or 10%
Ireland 12.5%


C, stability to use the same offshore scheme for many years
I have no idea about this. please give me your thoughts.


3, I read so many article about making Non resident one member LLC in USA, to evade Amazon withholding tax / income tax in USA.
Some says this is safe and other says this isn't. What is your thought about this?


https://expattaxprofessionals.com/blog/article/amazon-fba-and-us-federal-taxes-for-foreign-sellers
"
Single-member US LLC is the seller:
From a substantive tax perspective, there is some ambiguity as to whether this structure presents additional adverse tax implications. An argument can be made that the structure is not problematic because under the entity classification rules as set out in Treasury regulations, a U.S. LLC is treated by default as a disregarded entity from its owner if it has a single owner. As such, from a substantive tax perspective, the U.S. single-member LLC does not exist, and therefore its activities are considered to be the activities of its foreign owner. This position, however, is hardly free from doubt, both under domestic and treaty law."



https://onlinetaxman.com/us-llc-tax-haven-for-foreigners/

"Potential risk of LLCs for foreigners​

Be aware that applying this approach to Amazon selling uses a rather aggressive reading of the US tax code and does not come without risks.

To date, we are not aware of any court ruling against this interpretation of the tax code. However, as with any aggressive approach to tax planning, there is always the possibility that the IRS eventually rejects it."


Thank you for reading and looking forward to your comments.

Maybe Hong Kong is considered as China in US tax treaty? In that case Hong Kong might be an good option as well.

. Hi my friend.
. Could you guide me please ?
. I live in the UK, England.
. I plan to start AMAZON.UK FBA then expand it to the AMAZON.US.

. My goal is,to minimize or avoid paying corporate tax, income tax, dividend tax and other things you know better than me.
. My question is, where do you suggest me to open a company ?

. I have read all of conversation in this topic and HK caught my attention to open my company to do amazon fba.
. Could you give me your idea please ?

I'm naturally born and then immigrated. I'm not using a standard brick and mortar bank since I incorporated during Covid and have not had a chance to go back to Hong Kong. I'm currently using Airwallex, which serves my ecommerce business very well. The total fees are approximately 0.3% in, 0.3% out, depends on what you use it for and what currencies you use.

I'm planning on opening a DBS or Hang Seng business account when I get the chance to go in person.

Indeed, it is the most reputable tax-free jurisdiction I can think of right now.

Hi Longr.
I hope you well.
I live in the UK, England.
. Could you tell me, Either can I use Airwallex as well or not ?