Taxation of an Online Store
For domestic enterprises selling goods online, there is an opportunity to reduce the tax base to zero. In the case of online trading, the use of classic offshore schemes in the context of the transnationality of online business makes it possible to radically reduce the taxes of an online store, while remaining fully within the framework of the law. This combination allows for the application of the most “advanced” tax planning technologies.
When it comes to physical goods, such schemes allow trading through offshore companies with almost any product category. If a company sells small-sized stored products, then in the Russian Federation it makes sense to leave only that part of the business that deals with delivery on the “last mile.” It is much more profitable to carry out sales and receive payments through the website on behalf of a foreign company, and to pay taxes on the online store offshore at a rate of 0%.
In this instance, the term “zero-profit offshore e-commerce business” would be appropriate. It’s worth noting that this solution is quite common abroad. However, setting up such a scheme requires not only an offshore company for the e-commerce store but also two or three additional companies and a dozen vital elements, without which the entire venture risks being deemed illegal.
Offshore Online Shop
The first thing to understand is that not all offshore jurisdictions are suitable for trading schemes with the Russian Federation. Russia, like many other states, has lists of offshore jurisdictions, operations with which are either prohibited or are under serious control by the relevant authorities.
The second difficult point is the odiousness of offshore structures. In order to avoid the difficulties experienced by offshore enterprises in interacting with the “outside world”, often, between an enterprise operating at a zero tax rate and its partners and end customers, a “layer” is made from an Operational company. This is necessary in order to hide the “special legal entity” behind a company from a prestigious jurisdiction.
Online Shop. Taxes. Schemes.
After determining the jurisdictions of the participants in the future offshore scheme, it is necessary to establish links between them. This raises the question of agreements between the holding companies, which, in fact, turn them into a single structure. First of all, you need to understand that you cannot transfer 99% of the profit offshore under a “bogus” agreement, you must always act within the framework of the law – this is the most important point. In other words, not every agency, referral, or franchise agreement is suitable for a particular business. The text of such an agreement should be as realistic as possible and therefore closely linked to counterparties, product nomenclature, pricing, and logistics. The result of “inconsistencies” in the documentation can be an accusation of organising a fraudulent scheme, the disclosure of the names of beneficial owners by a court decision, and the placing of these persons on the international wanted list. Therefore, the development of agreements for each individual business model is a critical element on which not only the taxation system of the online shop depends, but also the personal safety of the beneficiaries.
Tax system for an online shop.
Solutions. Consultations. Implementation.
For online businesses, there are various offshore solutions. But usually, after a superficial acquaintance with tax planning, Internet entrepreneurs begin to consider such questions as “Taxes on online stores in Russia” simply meaningless. A competent businessman always tries to completely rid himself of this problem, immediately taking trading companies to offshore zones and leaving only a courier service on the territory of the Russian Federation (usually one for several stores). Therefore, a much more interesting question is: “Which offshore jurisdiction to choose for an online store?”.
To get answers to your questions and assistance in implementing such schemes, you do not need to be an expert in international Internet business. Our company employs experts in all related fields. It is enough to contact our company and you will be provided with a full range of necessary services:
Our Services:
■ Structuring offshore schemes for tax-free online trading
■ Offshore internet merchant account acquisition
■ International tax planning for e-businesses
■ Company formation and structuring of international entities
■ Opening various accounts with foreign banks
■ Drafting international agreements, contracts, and offers
■ Obtaining licences abroad
Dear Sirs,
Should you be interested in the services of our firm, we would like to draw your attention to the fact that we are prepared to meet the needs of your company in several areas: legal, tax, and IT.
Furthermore, ordering a comprehensive package of services for the optimisation of your business will prove considerably more cost-effective than addressing each component separately.
We look forward to hearing from you!
