E-Commerce company structure for minimal tax

[uplana]

The cross boarder what "modernised" structure in Europe sucks and makes it a complete different way to do business online.

 

[dirtyharry]

What is it you want to say with that @uplana ?

 

[daniels27]

E-commerce you say, dont forget to comply with Europes draconian OSS scheme.
https://vat-one-stop-shop.ec.europa.eu/one-stop-shop_enPer 2025 there are some changes again.

It is like sales tax in the US. You busy charge it to the customer and good. Everybody selling there pays is, so why bother?

The cross boarder what "modernised" structure in Europe sucks and makes it a complete different way to do business online.

Yes, but let's be honest let them charge their residents sales tax and VAT. They are all mature people that can leave it they do not want to pay. It course they don't. But not because they are lazy but because they like the subsidies that their VAT pays for.

OSS is good, you only register once and pay once. Much less overhead than having to register in all countries.

Of course not paying would be most interesting but I guess this isn't an option anyway. They want it, they pay it, we collect it for them.

 

[GPT]

I get that it’s comparable to the U.S. sales tax. It’s more a big pain in the a*s as it limits a lot of people on their entrepreneurial starts as it adds more complexity for them.

If you are a seasoned e-commerce entrepreneur then it’s just a nuisance which changes the conversation after implementation into price optimization to maximize profits.

 

[daniels27]

I get that it’s comparable to the U.S. sales tax. It’s more a big pain in the a*s as it limits a lot of people on their entrepreneurial starts as it adds more complexity for them.

If you are a seasoned e-commerce entrepreneur then it’s just a nuisance which changes the conversation after implementation into price optimization to maximize profits.

Yes. I totally agree. It is a nuisance. But mainly in terms of adminstration rather than having to collect taxes for the consumers. A global OSS with streamlined rates and exemptions and a reverse charge regime for companies would eliminate most if the nuisance.

 

[dirtyharry]

Singapore offshore company could work. Then you need to fly under the radar or keep travelling in SEA.

More permanent alternatives would be any of the SEA countries like Idonesia, Taiwan, etc. with about 3% personal income if done properly. If you know which country you prefer, check with a local lawyer doing expats. They normally know the holes.

okay, Singapore offshore company is very expensive to setup and maintain as far as I remember?

 

[daniels27]

okay, Singapore offshore company is very expensive to setup and maintain as far as I remember?

Yes. Will definitely cost you $1200 per year if you find have a local director. I really cannot recommend to do it for fun. You can easily live a couple of months of that money in Armenia.
https://swiftly.sg/#pricing

 

[uplana]

I get that it’s comparable to the U.S. sales tax. It’s more a big pain in the a*s as it limits a lot of people on their entrepreneurial starts as it adds more complexity for them.

You're absolutely right, it feels like it’s becoming harder and harder to manage all the paperwork and accounting involved in running a small business. It’s overwhelming how much they burden small business owners.

 

[Mike Forman]

To avoid paying profit tax you can set up a Chinese and Hong Kong corporation.
Use the Chinese company to register and sell on e-commerce platforms, receive the funds on a payoneer account. Prepare a contract between the HK and Chinese company where it states the Chinese company acts as an agent. Dont report or transfer any of the income on payoneer in China, only some salary can transfer to personal Chinese bank account by payoneer. Transfer remaining income to the HK company registered as offshore company (0% tax) and use this account to pay suppliers and take out remaining as dividend at 0%.

Ofcourse this set up only works if you live in a country where they dont care about this set up or that is not part of CRS. If you live in EU forget about it as the money you will save you will pay 10fold back + legal fees.

 

[GPT]

You're absolutely right, it feels like it’s becoming harder and harder to manage all the paperwork and accounting involved in running a small business. It’s overwhelming how much they burden small business owners.

I think it was around 2010-11-12 when I made a comment to a friend about the administrative burden. Back then I said that we would end up having 1 fulltime employee on compliance, i.e. dealing with banks, registrar, surveys (some are obligatory) and all the other s**t thrown at entrepreneurs. The other day I spoke to a medium sized company owner and he said that he hired such an employee last month.

Add the tax complexities to it and it gets even worse..

 

[dirtyharry]

I think it was around 2010-11-12 when I made a comment to a friend about the administrative burden. Back then I said that we would end up having 1 fulltime employee on compliance, i.e. dealing with banks, registrar, surveys (some are obligatory) and all the other s**t thrown at entrepreneurs. The other day I spoke to a medium sized company owner and he said that he hired such an employee last month.

Add the tax complexities to it and it gets even worse..

Insane, It seems very illogical to make it so difficult to run a business, but I guess that's how China operates.

 

[uplana]

Not much surprises me when it comes to China and running a business. It seems to me that they deliberately make it so complicated to keep an option open for penalizing people, imposing fines, or even seizing their business if it becomes too profitable.

Oh, that does remind me a bit of what is happening in the EU these days and what we might expect in the next 5 to 10 years.

 

[Primat2024]

Hello!

I am looking for some recommendations on an effective structure to lower total effective taxes.
I am currently in the process of cutting ties with Canada and open to relocating (mostly) anywhere. I do have a preference on Malaysia due to the low cost of living and close proximity to the rest of South Asia.

I was originally looking to setup a Labuan company and meet the substance requirements in order to take advantage of the 3% CIT and 0% Dividends. However, from the looks of it, e-commerce does not seem to fall under the approved categories to take advantage of the 3% rate.

Would setting up a company elsewhere with a low CIT, then paying dividends to myself in Malaysia at a 0% rate be something that can work?

Any other suggestions or recommendations are greatly appreciated.

Cheers

can you tell me how you did it? I have a small ecom biz too and want to reduce my taxes.