BigCommerce international sales taxes: Guide for e-commerce sellers

Laura Tien May 03, 2024

Article E-Commerce

Being able to navigate sales taxes is essential for every BigCommerce seller, especially for those who have customers around the world. From the fundamental concept of sales tax to the intricacies of international tax regulations, e-commerce sellers face a myriad of challenges in ensuring compliance and efficiency.

In this guide, we’ll go through the basics of what sales taxes are and the regulations that exist in different regions for e-commerce businesses. Then, we’ll cover everything from setup to optimization, with a focus on how you can leverage accounting technology to make the process easier.

What is sales tax?

Sales tax is a charge imposed on the sale of goods and services, usually calculated as a percentage of the purchase price or as a flat rate. As a business owner, it’s your responsibility to collect sales taxes on behalf of the government by including an additional cost to consumers at the point of purchase. You must also remit (pass on) sales taxes to the government.

What tax regulations are there for e-commerce sellers?

As an e-commerce seller, navigating sales taxes can seem complex, especially considering that the regulations vary depending on the jurisdiction at local, state, national and international levels. The amount of tax to charge depends on the location of the seller, the buyer, as well as the nature of the transaction.

You’ll have to consider the tax rules for the jurisdiction that your business is based in as well as for the regions you’re selling to. We always recommend working with a tax accountant to ensure you’re staying compliant. However, it can be useful to have a basic understanding of the common international sales taxes.

• Sales tax in the United States: In the US, you establish a ‘nexus’ within a state once you meet certain guidelines such as having a physical presence in the state or conducting significant business activities within the state. If you live in the US, you’re required to register for tax in the state where you have a physical presence, collect tax there and remit it. For those not based in the US, you don’t have to register until you meet an annual threshold of USD $100,000 or 200 sales.
• GST/HS in Canada: In Canada, you need to register for a GST (goods and services tax)/HST (harmonized sales tax) number once you earn an annual income of CAD $30,000 or more. GST is generally charged at 5%. However, in some provinces, HST combines GST with PST (provincial sales taxes), meaning the total sales tax comes out to 13% to 15%.
• GST in Australia and New Zealand: Regardless of whether you’re based in Australia/New Zealand or not, you generally don’t have to register to collect and remit GST (goods and services tax) until your revenue is over AUD $75,000 or NZD $60,000 in a year. GST is charged at 10% in Australia and 15% in New Zealand.
• VAT in the European Union: In the EU, VAT (value-added tax) ranges from 15% to 25% with certain items, such as books and food, having a reduced rate of around 5%. Once you exceed an annual threshold of €35,000, you are required to register for VAT.
• VAT in the United Kingdom: VAT works similarly in the UK as it does in the EU. The current threshold is £85,000 for those based in the UK. For those outside of the region that sell to UK customers, you may now have to register for UK VAT regardless of your sales volume.
• Sales taxes in Asia: Notably, Hong Kong does not impose sales taxes on goods and services. In Singapore, sellers must charge a 7% Goods and Services Tax (GST) on online purchases exceeding SGD $400 for local customers, while overseas sellers face a 9% GST on goods above the same threshold. In the Philippines, online sales below PH ₱1.92 million annually incur a 3% Value-Added Tax (VAT), while sales exceeding this threshold are subject to a 12% VAT. Filipino residents must pay a 12% VAT on purchases exceeding PH ₱10,000 from overseas sellers.

How to set up international taxes in BigCommerce

To do a basic setup of international taxes in BigCommerce, there are a few basic steps that BigCommerce recommend:

1. In your dashboard, click Settings › Tax, and then Edit.
2. Create tax classes for all product types, e.g. perishable goods, shipping, gift wrapping, etc.
3. Create tax zones and tax rates.Do a test order for each tax scenario.

Third-party plugins for BigCommerce sales taxes

You may also consider integrating a third-party plugin that can help you with additional functionality and customization. For example, tax calculation and reporting. Below, we’ll go through some of the key features and pricing details for the most popular plugins.

Avalara AvaTax

Pricing: Plans generally start at $50 to $100 but Avalara will give a customized quote based on your specific needs.

Features of Avalara AvaTax for BigCommerce:

• Supports businesses operating in multiple jurisdictions globally
• Calculates sales tax for transactions in real-time
• Automates tax filing and remittance
• Manages tax exemptions
• Reporting and analytics

TaxJar

Pricing: Plans start at around $19 per month.

Features of TaxJar for BigCommerce:

• Primarily supports businesses operating in the United States
• Calculates sales tax for transactions in real-time
• Assists with tax filing and remittance
• Manages tax exemptions
• Reporting and analytics

How to sync sales, payments and taxes to accounting software

Next, you need to connect BigCommerce to your accounting software to automatically sync sales, payments and taxes. You could do this manually, however, it could take a few hours every month and leaves room for human error. Amaka offers integrations for BigCommerce + Xero, BigCommerce + QuickBooks Online and BigCommerce + MYOB.

Benefits of a BigCommerce accounting integration:

• Sync BigCommerce transactions to accounting software automatically on a daily basis
• Pricing options include a completely free plan or get started with a 7-day free trial of a premium plan
• Customize your sales summary view with a variety of formats to choose from
• Include all sales and payment transactions, taxes, fees, gift cards, shipping and more

How to set up a BigCommerce accounting integration:

• Follow the BigCommerce integration setup guide to set it up on your own, or
• Book a free 30-minute support session for us to walk you through the entire process

How often should you review tax reports?

Now that your transactions are automatically synced to your accounting software, it becomes easier to generate and review tax reports. It’s recommended that you review tax reports every quarter so that you can identify any discrepancies or errors. By regularly preparing and reviewing tax reports, you can maintain organized records and reduce last-minute rushes and oversights when tax time rolls around.

Do BigCommerce businesses need a tax accountant?

It’s recommended that BigCommerce businesses have a tax accountant, regardless of what stage of operation you’re in. A tax accountant can ensure you’re compliant with the complex tax laws, maximize tax deductions and minimize liabilities. You can rest assured your finances are healthy and maintaining legal compliance.

Find an accounting professional experiences with accounting technology by browsing the Amaka Advisor Directory. You can filter to find accountants and bookkeepers in your area that have experience in BigCommerce specifically.

Key takeaways on BigCommerce sales taxes

Mastering sales tax management is crucial for the success and compliance of BigCommerce businesses. By understanding fundamental concepts and leveraging technology solutions, businesses can streamline tax processes and ensure accurate record-keeping. Finally, consider regularly reviewing tax reports and getting a professional to help you out.