US Sales Tax for Pakistani Amazon Sellers: What Amazon Covers — and What You Still Owe

Most Pakistani sellers arrive at US sales tax the same way: they form a US LLC remotely, open a fintech bank account, send the first shipment to an Amazon fulfillment center, and notice a line called 'MarketplaceFacilitatorTax' in their settlement report. The natural conclusion is that tax is handled — Amazon took it, remitted it, done. That conclusion is half right, and the wrong half is where the exposure lives.

Amazon genuinely does carry a large part of the load. What it does not do is cover the sales you make outside its marketplace, remove your registration duties in states where your inventory sits, or touch your federal and Pakistani income-tax obligations. Those four gaps — non-marketplace channels, FBA-driven nexus, the federal filing layer and the FBR side — are what this guide maps.

The stakes are not hypothetical. States assess back tax with penalties and interest when a seller with nexus never registers, and Amazon's collection on your behalf does not erase a duty to file that a state imposed separately.

Pakistani sellers know sales tax as one federal regime: FBR, a single 18% standard rate, one STRN registration, one return. The United States has no federal sales tax at all. Instead, 45 states plus Washington, D.C. levy their own sales and use tax — and the buyer's location decides which rates apply, because every state sources the tax to the destination, not to the seller.

Rates stack. A single order can attract state tax plus county, city and special-district tax on top, with combined rates ranging from zero to over 10% depending on the delivery address. Four states — Delaware, Montana, New Hampshire and Oregon — levy no statewide sales tax at all, and Alaska has only local sales taxes.

The practical consequence: unlike Pakistan's one registration, US sales tax is a per-state obligation. The question is never 'am I registered for sales tax?' but 'in which states am I required to be registered?' — and the next two sections explain what puts you on the hook in each one.

Every US state with a sales tax has enacted a marketplace facilitator law, and all of them have been in force since January 1, 2023. These laws make the marketplace — Amazon — the party responsible for calculating, collecting, remitting and refunding sales tax on third-party transactions shipped to buyers in those states. That is the line in your settlement report: Amazon acting as the taxpayer, on its own registration, with its own remittance schedule.

For Pakistani sellers this is genuinely good news: on the marketplace itself, collection is Amazon's legal responsibility in the states where these rules apply. You do not add sales tax to your Amazon listings and you do not remit what Amazon already collected.

But read the scope carefully. The law covers transactions made through the marketplace, into states with the legislation. It says nothing about your Shopify store, your own website, wholesale invoices to US distributors, or the obligations your inventory creates. Amazon's registration is not yours — and states still hold sellers responsible for duties the facilitator laws do not transfer.

Nexus is the legal connection that lets a state require you to register and file. The most misunderstood trigger for Pakistani sellers is physical nexus — and FBA inventory is physical nexus. When Amazon distributes your goods across its fulfillment centers, your inventory sits in warehouses in several states at once, and in each of those states you are storing business property.

This matters even where Amazon remits everything, because a number of states still require a seller with physical nexus to register and file periodic returns — sometimes reporting the marketplace sales the facilitator already taxed, sometimes showing zero tax due on them. Skipping registration because 'Amazon already collected' is how well-meaning sellers accumulate failure-to-file penalties.

Physical and economic nexus also stack. You can cross a state's economic threshold on small non-marketplace sales while your FBA stock gives you physical nexus there anyway — the obligations add, they do not offset.

Since the Supreme Court's South Dakota v. Wayfair decision in 2018, states can also require out-of-state sellers to register once their sales into the state cross an economic threshold — no warehouse needed. The pattern most states adopted is USD 100,000 in sales, some with a 200-transaction alternative, measured over the previous calendar year. In 2025-26 the trend moved toward simpler dollar-only tests: Utah dropped its transaction count in July 2025, Illinois followed from January 1, 2026, and Ohio lowered its USD 500,000 line to the standard USD 100,000.

The large states hold higher lines — and California is the trap for marketplace sellers, because it counts sales Amazon already collected toward your own threshold. New York is stricter still, requiring both the dollar and the transaction test to be met.

First, non-marketplace sales. Amazon's collection stops at the marketplace edge. The moment you sell through Shopify, your own site, or wholesale invoices, you are a conventional remote seller: track your per-state sales, register where thresholds or nexus apply, collect, file and remit yourself.

Second, registration and returns where nexus exists — even when the tax was collected. FBA inventory can require a permit and periodic filings in states where Amazon remitted 100% of the marketplace tax. The returns are often minimal, but the duty is real and the penalties for ignoring it are not.

Third, the income layer. Your LLC owes the federal Form 5472 with a pro-forma 1120 every April 15 — the filing that carries a USD 25,000 penalty and the one most formation agents never mention — plus US federal income tax on US-effective income and, in some states, income or franchise filings (California's Form 568; a Wyoming LLC with no US activity generally owes none). Fourth, the FBR side: as a Pakistani tax resident your worldwide income is reportable in Pakistan, and US federal income tax paid can generally be credited under section 103 of the Income Tax Ordinance 2001 — while US sales tax is not a credit at all, only a deductible cost of doing business.

Compliance here is a calendar, not a crisis — if it is built before the deadlines are. The sequence that works for Pakistani FBA sellers: