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Dropshipping from China - US Sales tax?

by mrcouchpotato
7 replies
I'm thinking of starting an ecommerce website and selling products that would be dropshipped from China.

I live in Kentucky in the USA. Would I have to charge sales tax to anyone who also lives in Kentucky and purchases one of my products? I don't think I have to charge it to anyone who lives outside my state, though.

I'm just checking, since the products are being dropshipped from China, that the sales tax rules may be different.

Any thoughts?

Mike
#china #dropshipping #sales #tax
  • Profile picture of the author Ron Kennedy
    You might want to check out the wholesale forum if you get no luck here

    Good luck

    Cliff
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    • Profile picture of the author myob
      There are other pretty hefty fees associated with importing, so dropshipping direct from China would not be very profitable. For the most part, you would be competing against many who purchase in large quantities at very low cost per item. Look for domestic suppliers (who often can give you a better per item price), and if your sales justify it, import in quantity.
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  • Profile picture of the author auradev
    Yeah I was going to say, forget the sales tax, what about customs and returns? That has to be shipped via Air, do you really save that much or is this something not available in the US.
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    • Profile picture of the author mrcouchpotato
      Well, the products are medium ticket items ($250 - $600...not iPads or cell phones) and they aren't available in the US. There's actually is a good demand for them here and I'm surprised that nobody in the USA is importing them. It might be that they're too new or people think it's too much of a hassle dealing with importing.

      I have a whole business / marketing plan in my head and I'm working on putting it down on paper. I ordered one product from my supplier on Friday which left China today. I should get it in the next day or two. We'll see if there are any added duties or taxes when it gets here. That will help determine my costs.

      The supplier I found in China is very easy to work with and will even handle the returns and warranty issues through me. I'll be asking more questions about that before I go ahead with everything, though.

      I'll contact our state and ask them about the whole salestax issue and see what they recommend (or require).

      Mike
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      • Profile picture of the author myob
        There may be some specific reasons why those products are not available in the US. You should consult with a customs broker or trade specialist. Overseas merchants will basically sell to anyone, but it is up to you to know about any regulatory laws or restrictions. Sales tax is not going to be your only headache.
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        • Profile picture of the author zaccalcas
          If you need assistance with importing I am happy to help. One of our businesses is international freight forwarding.
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  • Profile picture of the author kindsvater
    Mike, it doesn't make any difference. You are selling the product and delivering it to a customer in Kentucky. That will trigger the sales tax.

    Example 1: You sell a product over the counter to customer.

    Example 2: You are out of a product so you later get it in stock from the warehouse then mail it to the customer.

    Example 3: You are out of a product and to save time you have the warehouse send it to the customer (drop ship).

    All invoke sales tax.
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