One of the best things about running an online business is choosing the most appropriate jurisdiction for your business needs. Sometimes, your home country is not the perfect option for you. Still, when you consider establishing your business abroad, you have the freedom to choose a country that expands your market experience and helps you save on your tax implications and official fees. Not to mention that you can benefit from its banking facilities and its flexible incorporation process.

In this article, we will provide an overview of the best jurisdictions to start an e-commerce business. But before jumping into this, let us have a look at the most critical factors to consider when choosing a country base for your online business.

The first and the most crucial question is: How do corporate incomes and corporate dividends be taxed in this country? This can have a huge impact on your and your partner’s income and dividends. Always go for tax haven countries. This is about the amounts that you or your partners will have to pay and about future investors in case you will be looking for ones. Think about it, who is going to invest in the company subject to significant taxation amounts?

The second question to ask is: what are the payment gateways in this country? Since you will establish an e-commerce business, you’re probably going to need a payment gateway linked to your online store to process the payments, especially international payments. Payment gateways options can be very limited in some countries yet, very advanced in others. What’s important to know here is that payment gateways are super beneficial for online stores looking to grow and reach international markets. It will allow them to accept payments no matter where they originated. The most popular payment gateways are PayPal, Stripe, and 2Checkout.

The third question to ask is: how flexible are the corporate rules and regulations in this country? This is about starting and operating your business in terms of the incorporation process. For example, in some countries, starting your business could take five working days once you submit all the required documents. In others, this can take up to 30 working days to be executed. The operation process, for example, even if you do not have to be physically there to operate your business, sometimes and in certain countries, there’s a requirement for physical office space and/or a resident director in the country of incorporation, or, the business licenses, where it’s required in some countries for certain types of business.

Now let’s move to the best jurisdictions to consider when choosing a home country for your business.

The first country to consider is the state of Delaware in the United States of America. This jurisdiction is the perfect option for your online business. Considering its flexible, easy, and fast incorporation process, setting up in Delaware and having a legally established entity can take up to 5 working days by only submitting your passport copy and some traditional corporate information, without any physical presence requirement. You can also benefit from the ability to apply for an international bank account with any of the USA’s banks. Therefore, link your business account to one of the reputable payment gateways. Moreover, surprisingly the state of Delaware is a tax haven for businesses. If you chose to incorporate a limited liability company (LLC), and as long as you’re not doing any business and equally not making any profits inside the USA, you won’t have to pay any US taxes, whether federal tax or state tax. But this is not the case for c-corporation. Such entity type is required to withdraw 21% from its corporate incomes for federal tax only.

The second-best jurisdiction to consider for your online business is Estonia. With its advanced digital infrastructure, there’s no surprise that Estonia is amongst the most advantageous country for e-commerce businesses. This country is the first in the world to offer entrepreneurs the opportunity to become digital residents through its e-Residency program. This program is specially designed for those interested in managing a location-independent business online. Once you have an Estonian e-Residency, you can establish your Estonian business online in one day. The process of setting up a business in Estonia is easy, fast, and convenient. As an e-Resident of Estonia, you can also take care of all your banking needs online. Still, you are required to be physically in Estonia whenever you want to set up your business bank account. Pay attention that Estonia is not a tax haven. If your only purpose in establishing your business is to avoid tax, you’re not in the right, please. However, suppose you want to enjoy running and managing your business online, paying a fair amount of taxes, and getting rid of red tape and bureaucratic formalities. In that case, Estonia is the place to be.

Finally, the third-best jurisdiction to consider is Dubai CommerCity, a free zone in the United Arab Emirates (UAE). This newly established free zone is dedicated to the growth of the e-commerce market in the Middle East and North Africa (MENA) region. Dubai CommerCity provides a unique e-commerce ecosystem to global and regional brands to help them set up and operate their e-commerce business in the MENA region. Besides its advanced e-commerce ecosystem and infrastructure, here are the other main advantages of setting up your e-commerce business in Dubai Commercity: no corporate tax, no income tax, fast business set up solutions, 100% foreign company ownership, 100% repatriation of capital, and profits, no currency restrictions and the ability to apply for a residency visa in the UAE.

Eventually, pay attention to this: yes, you may have the option to choose a jurisdiction to incorporate and run your business online from anywhere in the world. But this does not mean that your country of residence will not have the right to claim on your company earnings, especially if that company’s management is happening from your home office in your home country. Lexyom can always help you avoid such complications.