Taxamo gives your business the platform to realize its ambitions for digital service sales growth. We support you with an unrivalled breadth and quality of market-leading VAT/GST compliance services, giving you the unique insight and expertise you can rely on to meet your global tax requirements.
Proven innovative thinking and ground-breaking technology make Taxamo your trusted expert partner. We'll work alongside you as part of your team, enabling your digital sales journey now and into the future.
US Interstate Tax Challenge
Following the case Quill Corp. v. North Dakota (1992), the United States Supreme Court upheld a ruling that out-of-state businesses could not be taxed because they had no physical presence in the taxing jurisdiction. However, the 'Wayfair' ruling issued by the US Supreme Court on June 21, 2018 overturned this physical presence requirement. Now, all 50 states are entitled to collect tax on out-of-state purchases, regardless of their physical presence in each state. Each state can also now legislate their own position on sales and use tax rates for businesses selling in their jurisdiction.
This significant change could lead to companies facing over 10,000 possible tax combinations based on interstate sales tax compliance obligations.
Taxamo's expert services are evolving with this new legislation. Using our experience of dealing with the same type of legislation in over 60 countries around the world, we will partner directly with businesses selling in the US to guide them through changes as they happen, and prepare them for a US market where their sales will be taxed according to where their customers are located, rather than the physical location of their own business.
Global tax challenge
January 1, 2015 was a pivotal day for global indirect tax compliance. The EU extended the VAT place of supply rules to EU-based companies (non-EU companies had been in scope since 2003). This rule moved VAT/GST liability to the location of the customer buying the product and away from the location of the company selling the product. It changed the face of e-commerce overnight and kick-started a global tax revolution. One by one, countries around the world introduced similar tax collection rules. To date, over 60 countries have such rules in place regarding cross-border tax compliance.
This changing tax landscape has made selling products and services globally more complex. Businesses selling in multiple countries now need to consider a number of compliance variables such as: the location of their customer, their customer status (i.e. whether their customer is a business), compliant local invoicing, country-by-country registration, applying correct country tax rates, periodic filing in each country, managing foreign exchange rates and exposure.
Taxamo specializes in helping your business answer these questions. We partner with you to facilitate tax compliance while enabling you to grow your global sales.
In October 2017, the Organisation for Economic Cooperation and Development (OECD) published a report ‘Mechanisms for the Effective Collection of VAT/GST’ which clearly defined effective collection mechanisms for digital trade. These definitions are based on an assessment of existing global implementations, supported by active communication with key market stakeholders. Mechanisms that work from both a supplier and tax jurisdiction perspective are included in this report.
One such mechanism determines that an intermediary may be the deemed supplier for VAT/GST purposes. The October 2017 report states that such an approach is “being implemented increasingly in the context of digital trade”.
The OECD deemed supplier model is the basis of Taxamo Intermediary Plus service.