I have a similar question. I want to start a drop-shipping and print-on-demand business on Shopify, but I am based in the Philippines. However, most of my potential customers/target market and drop-shipping suppliers are US-based and EU-based. Does this mean that I must register a business/LLC in the US instead of the Philippines? Or can I register it in my own country? If I register in my country, would I still be able to dropship to customers in the US? If so, how do I handle the sales taxes for customers in the US?
Topic summary
Core Question:
Non-US sellers want to understand tax registration requirements when selling to US customers without physical presence in the country.
Key Tax Concepts Explained:
- Sales Tax Nexus: Physical presence (warehouse, employees) or economic activity (sales volume/revenue thresholds) in a state triggers tax obligations
- No Federal Sales Tax: US sales tax is state-level, ranging 0-10% depending on location
- Registration Requirements: Sellers with nexus must obtain an EIN from the IRS and register for sales tax permits in applicable states
Common Scenarios Discussed:
- Renting US warehouse storage creates physical nexus in that state
- Direct shipping from home country (India, Philippines, Saudi Arabia) may still trigger economic nexus if sales thresholds are met
- Using Amazon FBA/3PL networks across multiple states complicates nexus determination
- Drop-shipping models raise questions about where to register the business entity
Current Status:
Multiple sellers have similar questions but no definitive answers provided for specific situations. The discussion emphasizes consulting tax professionals, as thresholds and requirements vary by state. The complexity of determining nexus—especially for international sellers using third-party logistics—remains a key challenge without clear resolution.