US Tax Obligations for Taiwan Amazon Sellers: What You Need to Know

This article provides general educational information about US tax concepts relevant to Taiwan Amazon sellers. It is not legal or tax advice. US tax law is complex and your specific situation may differ significantly from generalizations. Engage a qualified US CPA or tax attorney with international tax experience before making tax compliance decisions.

Why this matters: Taiwan sellers who underestimate US tax exposure can face back-tax assessments, interest, penalties, and account garnishment years after the fact. Conversely, sellers who overcomplicate compliance based on misinformation waste resources on unnecessary filings. Understanding the framework helps you ask the right questions of your tax advisor.

All US states with sales tax have enacted marketplace facilitator laws that require Amazon to collect and remit sales tax on marketplace transactions on behalf of sellers. This covers all 45 states with a sales tax (Montana, New Hampshire, Oregon, Delaware, and Alaska have no state sales tax).

Practically, this means Amazon collects sales tax from US buyers and pays it to state tax authorities. As a Taiwan seller on Amazon marketplace, you generally do not need to separately register for or remit sales tax in US states for your Amazon sales — Amazon handles it.

However, if you sell through your own website (Shopify DTC), have inventory stored in a non-Amazon US warehouse, or have employees or a physical office in the US, you may have independent sales tax nexus in those states that requires your own registration and filing. The economic nexus thresholds (typically $100,000 in sales or 200 transactions in a state per year) may apply to your Shopify sales in high-volume states like California.

Whether a Taiwan company owes US income tax depends on whether it has "effectively connected income" (ECI) — income that is connected to a US trade or business. The presence of FBA inventory in US warehouses creates a question of whether this constitutes a US business presence sufficient to create ECI.

The answer is nuanced and has been the subject of IRS guidance and academic debate. The IRS's current position, as reflected in various private letter rulings, is that using Amazon FBA may create a US trade or business for foreign sellers, though the question is not definitively settled for all seller configurations. This is why Taiwan sellers should consult a US international tax specialist — not to determine the answer definitively from a blog post, but to assess their specific risk profile and compliance options.

US-Taiwan Tax Treaty: the US and Taiwan do not have a formal income tax treaty (Taiwan is not a country that can enter treaties with the US under the One China Policy). However, the Taiwan Relations Act and the US-Taiwan Tax Agreement (1981) provide some treaty-like protections including reduced withholding rates on certain income types. The specific application requires professional advice.

Form W-8BEN-E: Amazon requires all non-US sellers to complete IRS Form W-8BEN-E, which certifies your foreign entity status and potentially claims reduced withholding rates under applicable tax agreements. This form is submitted in Seller Central under Account → Tax Information. Amazon may withhold 30% of certain payments if W-8BEN-E is not on file.

Step 1: Complete Form W-8BEN-E in Amazon Seller Central immediately if you have not already. This certifies your foreign entity status and prevents Amazon from withholding 30% from your payments. The form expires every 3 years and must be renewed.

Step 2: Engage a US CPA or tax attorney with international e-commerce experience to assess your specific income tax exposure based on your business structure, revenue level, and nature of US activities. Look for advisors specifically experienced with "Amazon FBA foreign seller" situations — this is now a specialized practice area.

Step 3: Maintain detailed records of all US business activities — inventory levels in US warehouses, US-based employees (if any), US bank accounts, and US business registrations. These facts determine the extent of US tax obligations and are essential if you ever face an IRS inquiry.

Step 4: Consider the trade-off of forming a US LLC. A US LLC may simplify certain aspects of US compliance and banking but also creates unambiguous US tax filing obligations. Whether this is advantageous depends on your business scale and structure. Tax implications of US entity formation should be modeled before incorporation.