I'm a business in Estonia that does business with USA and Canada. What are the tax implications?
The business is fully automated. My call center is mostly outsourced in the Philippines. All I am doing is reselling a product so I am already paying sales tax. The customers that I resell to are re-sellers themselves.
Where do I pay taxes?
If you're not an American or Canadian citizen + you have no physical location, you only pay your Estonian taxes.
I would start with talking to a tax attorney in the state in which you are licensed and registered to do business in.
Hi, one thing you might find interesting on doing is finding a free zone outside the market you are targeting. There are zillions of free zones, and condition and requirements on each one of them, but in most of them you don’t pay taxes and receive the money in USD. You could try finding one but you will need at least one or two people there. If interested, I have experience on that and I can help you.
I can't speak to the Canadian tax implications, but I can address the U.S. specific issues. Generally, if you are a non-U.S. business selling products or services in the U.S., there are no U.S. federal income taxes owed on your profits in the U.S. Foreign businesses must generally operate through a "permanent establishment" in the U.S. in order for the profits of the enterprise to be taxed in the United States. The U.S. and Estonia have entered into a tax treaty which defines a permanent establishment as a fixed place of business through which the business of an enterprise is wholly or partly carried on. If you are operating your company exclusively from Estonia and the Philippines, then you should be okay. However, if you have a U.S. subsidiary entity, such as a Delaware LLC or C corporation, then the U.S. entity may have filing obligations and be subject to U.S. taxes.
