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For overseas sellers who are selling on Amazon from Hong Kong

Will I be taxed in Hong Kong on income earned from selling physical goods to customers on Amazon –

If I do not have a branch office registered in Hong Kong?
As Amazon only facilitates the conduct of the e-commerce transactions and the substantial part of the business operations are situated outside Hong Kong, the income earned from selling physical goods to Hong Kong customers will not be taxable in Hong Kong.

If I have a branch office registered in Hong Kong?
If a branch office is registered in Hong Kong, the income earned from selling physical goods to Hong Kong customers on Amazon will be taxable in Hong Kong.

Will I be taxed twice in my home country on the same income earned?

Double taxation implications may arise if the income earned from selling physical goods to Hong Kong customers on Amazon is taxable in your home country. Double taxation can potentially be mitigated through the double taxation agreement between Hong Kong and the foreign country. You may wish to contact your tax, legal or other professional adviser in your home country to ensure that you are fully compliant.

 

For Hong Kong-based sellers who are selling on Amazon (US marketplace)

Will I be taxed in Hong Kong on income earned from selling physical goods to customers on Amazon –

As an individual taxpayer?

You are considered a self-employed person if you have received full-time or part-time income from trade, business, vocation or profession. This includes the income earned through selling goods on Amazon. You have to report this income in your tax return.

Generally, sole-proprietors and partners registered with the The Companies Registry are self-employed.

All self-employed persons must report the income earned from their business operations as business income, and not as salary. The business income is part of the total personal income which is taxed at individual income tax rates.Do note that if you are physically located in, and operate the business, in Hong Kong, the income you earn is subject to Hong Kong Profit and Salaries Tax.

In the US: If I am not a US taxpayer?

The IRS regulations require non-US taxpayers to provide Form W-8BEN to Amazon.com in order to be exempt from US tax reporting requirements. Amazon.com may obtain identification information from you, such as a tax ID from certain sellers on Amazon’s non-US websites. In general, the IRS regulations require Amazon to collect identifying information from sellers who have a US address, US banking information, or other identifying information connecting the seller to the US.

If I am a US taxpayer?

As there is no double taxation agreement between Hong Kong and the US, you may be eligible for a unilateral tax credit on the foreign-sourced income that is remitted back to Hong Kong. This is only applicable if you have an overseas branch of a Hong Kong resident company in the US and if IRD views that the foreign branch constitutes a permanent establishment (PE) in the US.

Is this considered as an investment income?

No, it is not an investment income. All self-employed persons must report the income earned from their business operations as business income, and not as salary. The business income is part of the total personal income which is taxed at individual income tax rates.

Do I need to submit a separate Employer’s Return (Forms BIR56A and IR56B) to the IRD?

It is not required to submit a separate Employer’s Return form to the IRD.

As a company registered in Hong Kong?

As a company registered in Hong Kong, any business income derived from sales through Amazon will be liable to tax in Hong Kong.

The income earned from selling physical goods to international customers through Amazon.com (USA marketplace) is taxable in Hong Kong. Even though Amazon.com facilitates the conduct of the e-commerce transactions, the substantial part of the business operations are situated in Hong Kong and therefore it is considered as income sourced in Hong Kong.

Are there any government schemes to minimize Hong Kong income tax for e-commerce and/or overseas sales?

Hong Kong tax residents or companies are able to enjoy tax benefits provided under Double Taxation Agreements (DTAs) with an extensive list of countries. For the full list of companies under this agreement, read this article.

You are a Hong Kong resident individual if you reside in Hong Kong, have a permanent home in Hong Kong, or you have stayed in Hong Kong for more than 180 days during the years of assessment.

Your company is considered a Hong Kong resident company if it is incorporated in Hong Kong, or is managed or controlled from Hong Kong. Need more help on this from our tax experts? Contact us today for a free consultation.

Do I need to register a Hong Kong business entity in order to sell on Amazon?

Yes, in order to sell on Amazon, any form of business in Hong Kong should be registered. Do note that this is different from registering a company. This article illustrates the differences between company registration and business registration.

What are the advantages of setting up a Hong Kong Private Limited Company?

When you create a private limited company, you are creating a separate legal entity from yourself. It limits your liabilities as an individual – meaning that if your company has a huge downfall (eg. debts or losses) in your business, it will not impact any personal assets that you own.

A private limited company is the most scalable, advanced and flexible business structure in Hong Kong. It is the most common type of business structure in Hong Kong compared to a sole proprietorship. To fully understand the different types of company entities, you can read more here. The shareholders of a private limited company can either be individuals or corporate entities or both.

A private limited company can be 100% foreign or locally owned. There are no foreign shareholding restrictions. A private limited company has to appoint at least one resident director. He/she can either be a Hong Kong citizen, permanent resident or someone with a work pass. They have to be at least 18 years of age. If you do not qualify to be a local director and do not have anyone else you can use, Sleek can provide you with nominee services.

Is there VAT or GST in Hong Kong?

Hong Kong SAR does not have a VAT, goods and services tax, or sales tax.

Who will be responsible for issuing a Tax Invoice for my sales on Amazon?

The seller should set the relevant GST/VAT when listing the item. This should be based on the location where the goods are sent from. For more information, you can refer here.

What happens if my goods are shipped from an overseas warehouse to an overseas delivery location outside of Hong Kong?

For goods that are shipped from an overseas warehouse to an overseas customer whose delivery location is outside of Hong Kong, this is an out-of-scope supply and therefore you may need to account for VAT or GST taxes, depending on the country.

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