LINKS
IN THIS SECTION
- Introduction
- Digital Sales and
Distribution
- Offshore Banking and
Financial Services
- Offshore Corporate
Functions
RELATED
SECTIONS
-
Taxation
of Offshore E-commerce
- Regulation
of Offshore E-commerce
-
Offshore
E-commerce Facilities
-
Offshore
Professional and Financial Services
This section of
the e-commerce site deals with sales and distribution
from an offshore web-site, when the products
and services concerned need to be delivered
in a physical form or, in the case of services,
using physical agents (usually people!). The
traditional distinction between such products
and services and those that can be downloaded
by computer (see Digital
Sales and Distribution) has been that the
former involves a taxable event that may attract
import duty, VAT or sales taxes. See our Tax
Law section for an explanation of the impact
of tax on offshore e-commerce.
Currently the
Internet is experiencing huge growth of both
retail and business purchasing, and most of
this is taking place from web-sites (servers)
in high-tax jurisdictions. However, there is
no technical reason why an e-shop should be
confined to an onshore jurisdiction, indeed
an offshore location offers many possible benefits
to a company that either has or expects to have
a significant volume of electronic turnover.
Obviously the
central benefit to be gained from an offshore
location is to do with tax. Providing the corporate
structure is correct (see
Tax Law ), an offshore company will often
pay little or no tax. Even if the offshore company
is controlled from a high-tax jurisdiction then
there may be considerable flexibility in the
timing and amounts of tax needing to be paid,
although the governments of high tax countries
are seeking more and more to restrict such flexibility.
For a company that is able to move the bulk
of its supply-chain offshore, it has often been
possible to avoid a permanent (thus taxable)
presence in the original high-tax country: simple
warehousing and delivery functions not being
enough in many countries to create a taxable
presence, although again, governmental attitudes
are changing.
Additional benefits
may include lower labour and overhead costs:
e-commerce sales and distribution is always
likely to reduce such costs, but the savings
may be much easier to realise if the web-site
is located far away from existing operations.
However it is not always true that offshore
jurisdictions are cheaper or more flexible than
high-tax jurisdictions. See the Lowtax.net
Jurisdictions section for information about
individual jurisdictions.
One sure benefit
of e-commerce is 'internationalisation', and
it may well be that an offshore vendor is in
a more favourable situation to service multiple
and diverse countries than one in a high-tax
area. If a company's procurement is global in
scope (or could be) then an offshore jurisdiction
will almost certainly offer interesting commercial
and fiscal opportunities; some offshore jurisdictions
have tax-free zones, or are themselves completely
tax- and duty-free, allowing warehousing, processing
and marketing of products for onward shipping
that will in this way avoid any entanglement
with the tax and duty net until the very last
moment.
OFFSHORE
E-COMMERCE APPLICATIONS
- Introduction
- A description of the main types of business
activity that can take advantage of offshore
e-commerce or e-business .
- Digital Sales and
Distribution - Offshore opportunities for
marketing, sales and delivery to consumers and
businesses.
- Offshore Banking and
Financial Services - Offshore opportunities
for marketing and sales of financial products
and investment management.
- Offshore Corporate
Functions - Opportunities for corporations
to locate core functions offshore.
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