How to choose the best tax system for a marketplace?



What is a marketplace?

A marketplace is an online platform designed for buying and selling goods. The marketplace acts as an intermediary between the buyer and seller, providing them with a convenient platform for placing goods and buying them. 

This business model acts as a win-win solution for both the seller and the buyer, since:

  1. The seller does not need to develop their own online platform for selling goods, spend time and, most importantly, money on creating and advertising their own store;
  2. The buyer receives:
    1. The ability to centrally select products without having to search for a specific store for a long time;
    2. Fast and convenient delivery;
    3. Get full support from the marketplace while working with it.

The impetus for the development of marketplaces was the emergence of market giants such as Amazon and Aliexpress, which showed the convenience of a centralized platform model for users.

Which tax system should I choose for my marketplace?

Since the marketplace acts as a kind of intermediary between the seller and the buyer, this entails a number of legal subtleties that must be observed for all three parties to work correctly.

There are several ways to resolve the seller – marketplace relationship:

  • By entering into an agency agreement, where one party (marketplace) performs certain actions on its own behalf on behalf of the seller for a certain fee;
  • By entering into a service agreement, according to which the marketplace performs sales and advertising services on behalf of the seller, and the seller pays the marketplace a fee;
  • By executing an order agreement, according to which the marketplace undertakes to perform legal actions for the sale of goods on behalf of and at the seller's expense;

Despite the apparent similarity of these three contracts, one of the key differences between them is the definition of the tax base of the marketplace and the seller, namely:

  • When entering into an agency agreement, the marketplace's tax base is the remuneration received as a result of performing actions under the agreement;
  • Under a service agreement, the tax base is considered to be the amount received from the seller for performing this service;
  • In the contract of assignment, the amount of remuneration will also act as a taxable base.

As mentioned above, the marketplace will be an independent taxpayer, so you need to choose the tax system that is most suitable for the current way of implementing relations with the parties.

The most appropriate tax systems are:

  • General taxation system;
  • Simplified taxation system.

When choosing a general tax system, the marketplace must pay two standard types of tax:

  • Income tax in the amount of 20%;
  • VAT from 0 to 20%.

The law also provides for a simplified tax system, which allows you to reduce the amount of tax payments by exempting you from paying the following taxes:

  • VAT;
  • Reduction of corporate income tax.

Instead, it is proposed to pay a tax that depends on the object of taxation chosen by the organization, namely:

  • Item - "Income", the bid for which is 6%;
  • Item – "Income minus expenses", the rate for which is 15%.

If you choose the second tax object, you can reduce the amount of tax by deducting the cost of creating a website or other operating expenses.

It is often more profitable for the platforms to apply the Simplified Tax System, but you need to choose the right object of taxation in order to avoid unnecessary expenses on taxes.

What tax system should I choose when working with marketplaces, if you are a seller?

There are also several tax regimes for sellers-the general tax system and the simplified one. 

The Simplified Tax System, as the name suggests, is much easier to understand and work with, since there is an exemption from excessive payment of taxes, it is only necessary to determine the object of taxation based on the expected expenses and calculations from the current account of the company or sole proprietor.

Thus, there are several main tax systems used by both sellers and marketplaces themselves – the general tax system and the simplified one. In order to choose the most optimal system, it is necessary to study all questions regarding the company's property and types of settlements from the company's account. If you need help choosing a tax system and other issues related to the operation of marketplaces, you can contact A4 Law Firm, where you will be provided with a full range of services on this issue.


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