Hi all, I'm about to launch my first e-shop and I just realized there's the question on sales tax which is not very clear to me. I've seen some discussions and they appear to be very complicated without a clear conclusion. Can someone kindly help to explain if I'm liable for any sales tax when I dropship from Aliexpress to US customers, based in Singapore?
If so, should I charge it back to the US customers? How does it work?
Any prompt advice is much appreciated!
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Nick here from Shopify.
The first thing I always recommend to someone asking about taxes is to talk to a local tax professional, accountant, tax office or a legal representative about it. The reason for this is because taxes are different everywhere in the world, even within the same country sometimes. The local tax representative would know better than anyone about the tax laws for where you are based. For example, I wouldn't know the tax laws for Singapore
In saying that, Shopify also has a helpful guide on how to set up taxes for your store if you are based outside of the USA & Canada which you can see here.
All the best, Nick
Thanks for your reply, @Nick
In fact, I've already checked and as far as local law is concerned, it's more about income tax rather than sales tax.
However my question is more about the sales tax for the US market which I'm targeting from my Aliexpress dropshipping. As far as I know, there will be some sales tax implications to the US customers so I'd like to inquire if anyone could advise how to go about on this - do I charge it back to the customers?
Ah ok. You are asking if you need to charge a different sales tax to US customers as you might be shipping there?
The Shopify help documents talk about using the default tax rates for setting up taxes outside of the US and Canada here for countries and regions to which you will be selling and shipping your products.
Hi @Nick , I'm finally at the last stages of testing the purchase on Shopify!
Under Taxes setting, I have already clicked on "Calculate taxes automatically" for the US market. I have also ensured that I've included all my products with "Charge taxes". However, when I see the general Tax page, it still states "not collecting" for some reason. Or perhaps that's normal?
So I did some tests to check-out the purchase and noted that the taxes are not listed anywhere at all. Is that normal or am I still missing something?
Appreciate your advice, TYVM!
Hi @carole_t ,
Once you click into Set up, there are some other details which will be different depending on which country you select. Once you fill in some of those details it should change from Not collecting, to Collecting. I made an example in my test store which you can see the screenshots for below:
- I made an example of a USA setting
And it changed to
This would be mainly for if you have a physical presence or an office in that location. If you don't have an office location in a region it might not be necessary to set up the taxes for it. This is where I would suggest to reach out to an accounting professional or a tax expert in your local area to see if this is something you would need to do.