Tax Problem Help – Tax: Are You Paying It Twice ?
This article would show useful for individuals or websites based countries apart from United states OF America and doing businesses with websites or companies in the United states OF America. This is particular to businesses from US to other countries. For businesses coming initially from from other countries, see International Tax Laws for that country.
For further and more accurate information, always seek advice from the site www.irs.gov
Whichever country you're coming from, the term business is always related to tax. It is your financial obligation that Must be taken into account and paid.
On-line Business is no different. The way on-line business is different from other businesses is the fact that it is the easiest method to cross international borders and bring into effect the international tax laws.
You might receive the payments by Checks, Bank Transfers, PayPal or whatever. All the income should be estimated and tax should be calculated and paid. If you are unsure consult your Tax Agent. He would be able to guide you better.
Online business is mainly generated from United states OF America as all of the good sites that provide good returns are based in United states OF America. It has opened its gates for individuals from all around the world (with exclusion of some countries) to conduct business from these online firms. According to the U.S. government's rule, all income or business generated from U.S. Businesses or income related to U.S. Businesses or Companies should pay tax in the US. The companies in the US are advised to hold tax from you or not to make nay.
Does that mean you pay the Income Tax TWICE? Once to the US Government and once again when you do your local taxes. The answer in "NO".
The great news is that US has got international rules for dealing with Tax issues coming up in these sorts of circumstances. To bypass it, you need to complete the APPLICABLE W-8 series of forms such as W-8BEN, W-8ECI, W-8EXP, and W-8IMY and give it the company whom you are doing business.
A further note, Google AdSense is a little different. It takes care to see your country of origin and advises you appropriately. You do have to pay tax in United states OF America if you have people, services and equipment based in the United states OF America. Having only a hosting service is not considered as owing equipment in United states OF America.
More information can be acquired from these publications:
These are some of the links to that give additional info on these issues. If you do not understand the technical tax jargon, seek advice from your tax agent or tax consultant.
0506 Inst W-8 (PDF) Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY (35.9K) PDF
0206 Form W-8BEN (PDF) Certificate of Foreign Status of Beneficial Owner for United states Tax Withholding (66.8K) PDF
0206 Inst W-8BEN (PDF) Instructions (43.8K) PDF
0206 Form W-8ECI (PDF) Certificate of Foreign Person's Claim for Exemption From Withholding on Income Effectively Connected With the Conduct of a Trade or Business in the United states (56.6K) PDF
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