Mo Oseni: So we work with a lot of brands in the US and the EU, probably the biggest markets we see, especially with the UK brands, especially with a lot of tariffs coming into play at the moment. If I was a UK brand going into either of those markets, when would you say I need to start looking at tax?

Imran Gulamhuseinwala: Yeah, I would start thinking about tax at the same time you're thinking about going into another market. I'm not saying that you should definitely start spending money on it or taking advice for any of these kinds of things, but just figure out what role tax will play in it. My mum used to say a stitch in time saves nine and honestly, when it comes to taxes, it's the right way to do it as well. So figure out what your tax strategy is.

Now when it comes to Europe, you might think, well, what does that actually mean? Well, tax can sometimes be paid purely on the basis of which warehouses you use, in which countries, and also what order you want to then roll out into different countries. And there are different ways of minimising your tax headache if you get that right. So just bring those considerations in, in the same way that any e-commerce brand would consider what country is most attractive and what the competition is doing. Also, just take the time to think: what's the right tax approach as well?

And then, as I said earlier, retrospective submissions are all doable. But the thing is that tax can sometimes be paid even before revenue starts being generated, which sounds horrific, right? But simply by putting your goods in a warehouse in a different country, you can attract some sort of tax. So again, figuring that all out beforehand is a much better way of doing it.

Mo Oseni: What are some of the biggest misconceptions founders of e-commerce brands have around tax?

Imran Gulamhuseinwala: I think a couple of the big ones are that they just leave it all to the finance team. And I feel for the finance team in that regard, because then they're running quickly to solve some of these problems. But actually, having a comprehensive strategy up front is a much better way of doing it. And then also, I think bringing it into your pricing considerations is very important too.

One of the other elements I've seen a lot of is founders, or those in charge of market entry, making assumptions about how quickly the tax piece can be put in place once you've got your strategy. So you go to all the work of figuring out your brand, your advertising, your logistics, your partners, your distribution, that whole piece. And then suddenly the whole thing is stuck in a warehouse because you haven't got a VAT registration number from some tax authority in some far-flung country. And I'm talking about big countries like France, Germany, Spain and Italy. They can take weeks, if not months, to provide that VAT number. So everything suddenly stops while you're waiting on that, and I see a lot of e-commerce brands tearing their hair out. But as I was saying earlier, if you just bring that conversation earlier into the whole process, internationalising just becomes a lot easier.

Mo Oseni: We've got a really nice picture of how that works on a general basis. Can you go into a bit more detail on how tax works in the EU?

Imran Gulamhuseinwala: Sure. So, the EU likes to call itself a single market. It's not. But then neither is India or the US. Just talking about Europe, I think some of the important things to bear in mind are that they do have VAT, like we have VAT in the UK, and that's a consumption tax. They also have customs duties, and customs duties are triggered when goods go into the EU.

But if we just put that to one side, the VAT is all paid at the individual country level.

This transcript covers the opening of the video.

Mo Oseni: Probably say the same about the US, as it has quite a similar structure in terms of the different states. Could you give us a bit more information on how sales tax works over there?

Imran Gulamhuseinwala: Yeah, I'd love to. And I'm going to start by saying it's even more complicated than the EU. But our job is to make these complicated things simple. Let me just give you the overview of how it works in the US. They don't have VAT. They have GST, good sales tax. It is a little bit different, but we don't need to go into that at this stage.

The most important thing about GST is that it varies by state, and in fact it can even vary by city within a state. So there are actually something like 12,000 jurisdictions in the US, and each of them has its own different rules.

So the interesting thing about the US and about GST is that whilst all the different jurisdictions have different rules, they also worry about something called thresholds. And thresholds are very important because the GST is only payable in a certain state if you cross that threshold. And it is therefore incumbent on the e-commerce brand to monitor how much of something they're selling in a particular state, or how many packages they're selling. Again, the thresholds vary by state.

Editor's note: the US tax referred to in this video is sales tax. GST (goods and services tax) applies in countries such as Canada and Australia.

Mo Oseni: If you are a global brand coming into the UK, what kind of things should you look out for in terms of UK tax?

Imran Gulamhuseinwala: So the UK is like any other country in the world, as is consumption taxes, VAT. The rules are pretty clear on it, and the tax authority here is quite easy to deal with. But the same issue fundamentally applies. If you're based in the US, in Delaware or Milwaukee, and you're trying to send goods over to the UK, you actually just don't know how it all works. And again, I think it is useful to use a third-party provider that can make it easy for you, because tax shouldn't be defining your business strategy. It should just be something that falls out of your business decisions.

What we've noticed with the largest global providers, and we deal with many, including some very large, now established ones from China, is that consolidating all of the different countries' compliance requirements through a single provider, a single team, is by far the most efficient way to do it.

A lot of the friction can be resolved, if you're an e-commerce company, by having clean data. And one of the best ways of having clean data is by having it come through a central area. Then it can be very clear what's being sold in that country, what the warehouses are in that country, what the logistics strategy is in that country, and you're not double counting and reconciling and all that kind of stuff.

Imran Gulamhuseinwala: So I think the best way to do it is to have a conversation early on. That way the e-commerce brand can figure out what the options are. Tax Desk has a lot of those early conversations on a no-commitment basis. We explore what the business requirements of the e-commerce company are: which markets they're interested in, what kind of logistics approach they want to have, what warehouses they'll use. And we can very quickly come up with some options, even just in a conversation. Often that is enough for them to have a picture in their mind of what they want to do, as the other very important parts of the puzzle come together, for example the branding, the pricing and the competition.

Then, as they get ready to move into that market, we get into a conversation with them about precise timing. We can talk to them about how long it will take to get set up from a VAT perspective in particular geographies. That could be for registration in a particular country, or for some of the simplification regimes like OSS. And then we can explain what kind of information is required in order to do those things. It can all happen in a very controlled, calm way, and that's what we're really trying to achieve. Where it goes wrong is if the deadline is suddenly explained, it's all a bit late and everyone's running around trying to do things.

Once the registration is set up and the e-commerce brand is succeeding and selling in that market, that's great news. Then the data starts flowing. Tax Desk has a very simple to use but comprehensive technology platform where we can effectively take in the data, and we turn that data into tax returns. Then we submit those tax returns in a timely fashion to the right tax authority, according to the strategy we've laid out with the individual e-commerce company. The e-commerce company knows exactly how much VAT they have to pay, by when and to whom, and the whole process runs very smoothly.

We don't like to tie e-commerce companies up in knots with complicated advice. We want to make it simple for them, so the problem effectively goes away. Get yourself registered in a nice, controlled fashion, in time. Provide us with the data. Submit the VAT, make some money.