Making E-commerce Taxes Easier & Faster

Staying up to date on changing sales tax laws is already an extremely difficult and daunting task for small business owners and e-commerce merchants. Now, factor in the influx of brick-and-mortar stores moving their business online due to COVID and the number of people opening first-time e-commerce shops for additional income – it’s becoming more challenging.

E-commerce is a fast-growing industry both in our country and elsewhere, but taxes on e-commerce are a relatively complex subject that few people are familiar with. In order to keep e-commerce accounting accurate, you need to know how to calculate taxes and in which countries you pay taxes. This, in turn, depends on what your product is, how your product moves and who are the buyers.

The main factors affecting e-commerce taxation:

Physical or e-product – whether you sell physical goods (tableware, clothing, accessories, etc.) or electronic products (digital posters, e-books, video courses, etc.).

How your goods move – whether you ship goods from Estonia to abroad, from China directly to a customer or use an EU intermediate warehouse.

The buyers – whether they are individuals or legal entities, inside or outside the: U.S, Asia, European Union.

What is Ecommerce Sales Tax?

Let’s start with the basics of ecommerce sales tax.

Sales tax is a small percentage of a sale tacked on to that sale by an online retailer.

Sales tax is a “consumption tax,” meaning that consumers only pay sales tax on taxable items they buy at retail.