BUSINESS GUIDE: E-SHOP BASICS
Basics gives an outline of the basic essential
requirements for establishing an e-commerce
sales and distribution site offshore. The sections
below outline the types of products and services
likely to be needed.
NB See the Lowtax.net
Services Directory open now in all jurisdictions
on the site for listings of offshore professionals
in many of these categories.
- Company Formation
establishing a tax-efficient corporate
structure and choosing the right type of offshore
company is crucial; assistance in selecting
and forming a company is available from law
firms and specialised company formation agencies.
besides tax law, various other types of legislation
can impinge on offshore e-commerce operations,
including data protection, distance selling,
intellectual property, product liability,
financial and marketing regulation. Local
offshore firms can help, but it is probably
necessary to pick one with an international
dimension if they are to give thorough advice
on international e-commerce business.
- offshore e-commerce is not different
from any other type, although a given jurisdiction
may have specialised auditing rules, and tax
computations (if there is any tax!) can vary
widely. It is never easy to choose between
a local firm with good local knowledge, and
an international firm which may be weak in
a particular jurisdiction. A Big Four firm
with a local office is perfect, but will charge
a perfect price.
- with some exceptions, most offshore
jurisdictions offer a somewhat limited choice
of internet service provider. The Lowtax.net
Jurisdictions section contains information
on the stage of development of e-commerce
in each case; and the Services Directory contains
the names of some ISPs. Except for a very
large operation, an in-house set-up offshore
will be expensive and technically risky -
therefore it will be wise to stick with the
best-developed jurisdictions where there are
established ISPs and hosts.
- this is less of a problem, since most
offshore jurisdictions have well-developed
telecommunications systems and good international
connections. Prices are falling rapidly, and
in many cases privatisation is imminent or
has already taken place, bringing price and
- Internal Technical
Staffing - although some straightforward
businesses will be able to use off-the-shelf
solutions for service delivery, or will be
able to rely on offshore technical support
agencies, most firms will need at any rate
some offshore technical staffing (and tax
considerations may dictate that these individuals
need to be offshore). Local skill levels are
inadequate in many cases, and it is absolutely
necessary to establish the availability and
cost of work and residence permits in advance.
See the Lowtax.net Jurisdictions section for
information on local rules in each case.
- Front-end Customer
Systems this includes marketing modules,
stock database, shopping basket or cart, associated
multi-currency and sales tax calculators,
and customer database or links to it.
- Payment Systems
- either out-sourced or in-house systems
to provide secure credit card processing and
Systems - either storage and down-loading
of digital product, or the control of stock,
warehouse and delivery mechanisms.
the major IT systems suppliers such as Oracle,
Sun and Microsoft are offering integrated packages
which handle major parts of these commercial
functions. The trend is increasing towards making
these available on an ASP basis (ie from the
Internet rather than locally), which will make
To the extent that
an offshore e-commerce operation is providing,
maintaining or running its own systems, please
see the remarks above concerning the supply
of skilled labour.
difficulty has traditionally been the expensive
and laborious process of arranging merchant
facilities through a bank. This is not directly
a result of offshore location and applies to
all e-commerce businesses, especially small
ones; but being offshore is likely to compound
the negotiating process. This is a problem to
address before and not after a move to offshore.