Friday, September 23, 2005

Internet Free Trade Zone in Vanuatu?

The government of the tiny island state of Vanuatu are apparently wise to the possibilities of small autonomous states - they're positioning themselves as an Internet Free Trade Zone. Get this :

"If your web site sells products that can be delivered digitally - information, music, software, or images - why not base your site where you won't have to pay taxes on the profits or sales? Under the new e-Business Act 2000, you can set up a Cybersuite and conduct business from Vanuatu without even setting up a company. "

OK, so this is hardly new news, as Kazaa and WinMX have already chosen to incorporate in Vanuatu, but it's the first it's been drawn to my attention - maybe I'll investigate...

1 comment:

MacTitan said...

Those tax laws can get pretty hairy. I haven't actually run a internet based business. But, with laws here in Texas it appears that where the order is 'automatically' processed determines if sales taxes are owed here in Texas, and if you decide to move the processing to another state, they could have a claim on you taxes (odds are they won't come after you -if at all- unless you have some physical presence there).

Another funny law suggests that if a software 'module' requires another company's application to run then you probably don't have to pay taxes on it, such as, Flash components. But, because Macromedia owns the Flash application, they would have to require sales tax if selling components. If you sold a Flash executable or an swf that were configurable with an xml file or something that required a generic web browser, it you would probably have to charge a state sales tax.

Remember it's not just the deliverable that may determine tax implications.