Questions regarding Business setup/registeration in a foreign country

I plan to run a site that will offer it’s services to businesses within a
specific country.

I am not a resident/citizen of the country where my site plans to offer it’s services but i would run this site with a TLD that is specific to this country as it is allowed and available.

My question is that my e-commerce business does not need a physical office in this country, all servers/setup can be maintained outside and No permanent employees based in this country are needed(I may do casual/temp hiring in this country to promote my business but nothing permanent as of now unless it really grows big.)

So does it make sense for me to to register a company/business in this country?

The business generates income through selling services to this country’s Residents/businesses but the business setup itself does not need to be physically existing in this country.

My main concerns are:

1)Why should i overly complicate my taxes - double taxation (pay taxes in home country where i’m a citizen on the income this business generates and if the business is registered in the country of operation, pay tax there as well. It’s possible though i might get credit on tax through double taxation treaties etc. but still why complicate my taxes) ?

2)why should i increase the number of complexities in running a business by having to complete business formalities/regulations in 2 different countries when i don’t need a physical presence in the country where i’m offering the site’s services as the business is internet based?

Is there any specific advantage I would have by running this business as a comapny registerd in the country where i’m offering services?

Any advantages of having a physical address in the country where i’m offering the services?

Hope you can enlighten me on something i’m missing here.

No suggestions as yet :slight_smile: Looking to hear from you people, what would you do in such a situation?

Would you register your ecommerce business as a llc or some company or not? If you would get it registered, why would you do so? What advantages do you see in getting it registered?

Not enough info - if you tell us which country it is you are targeting, perhaps someone will have the knowledge about that country’s business and tax set ups.

And which country are you from?

What is the product/service you are selling? For example, some countries have different tax rules for sales of intangible goods or services (‘electronically supplied services’).

There are a number of things to consider. A couple that may affect your decision are:

Some countries will only allow you to have a domain name within their country specific TLD if you have a business located in that country (eg. only businesses registered in Australia can get a .com.au domain).

Some countries require that any local business have a physical presence in that country or at least a person resident in the country who is responsible for that business (eg. Australian companies MUST have a director who resides in Australia).

Your question cannot be answered unless you specify which country you live in, which country you will operate the business in, and which country your customers will be in.

MY customers would be based in New Zealand, so that’s what i’m talking about and the primary reason to start there is as i have a few contacts there who could help to get started.

But my concern is should i register my business in NZ in respect to all the issues listed in the previous post?

I think that if you aren’t able to adequately respond to the question ‘where will you operate the business and where will your customers be’ then you will have issues far beyond the scope of this question.

Being based and operating here myself I may be able to give you some more detailed advice or hints if I knew what the service was.

However I can tell you that:

  • There are some services that require registration here, largely in the area of medical, building and professional services
  • being able to sell to the country doesn’t mean you will - for example the online auction market is held strongly by a local company, not by Ebay (and it generates 40% of local Internet traffic!)
  • there is a stronger feeling of “specialness” and “local trust” here than in my home country at least, this may impede on your selling of services here.
  • if you plan for staff or owner to be present here, immigration rules will likely apply (not giving immigration advice here, which would require registration !)

HTH, Jochen

P.S.: Feel free to send me personal email, but only if your questions are direct.

You’re probably fine, but might be worth getting further advice if you plan to be making a high turnover.

One of the main issues at hand here, in addition to what has been discussed above is if a permanent establishment (PE) is deemed to exist in new zealand due to your operations. Can be quite complex or simple, you’d have to look into what the new zealand rules are or have a tax adviser do so.

Still even if a PE is deemed to exist thats fine, you dont have to necessarily register as a company there, you will just be taxed like one there.

I don’t have any idea about registering a business to the country where you are about to serve your business through online. Maybe it depends on the country, and I am not familiar with NZ. But I think it would be better to register to safeguard your business and for future expansion as well. Customers would always go for legal business specially online businesses.

GrowConnect
www.grow-connect.com

It was 10 years ago, but when I did business in NZ I learned that they had a similar concept of nexus as the US. So, if you have any physical and substantive operations there you need to register and be taxed per the entity type. It’s not clear that you would establish nexus there, especially if you keep the transaction processing offshore.