U.S. digital sales tax plans dominate 2017

Thu Feb 16, 2017

Since the dawn of 2017 there has been a flurry of activity around online sales taxes in the U.S.

US digital sales tax

International digital service providers need to be aware of this as the potential domino effect of legislative change in the U.S. will have a major impact on business models.

States are now seeking ways to introduce and apply online sales tax legislation. To date the focus has been on how to tax out of state US ecommerce businesses. There has been little discussion on capturing tax revenue from Non US businesses. This could be a matter of time. Here is just a sample of the activity in early 2017, along with some of the reasoning behind each State’s motivation in trying to tax online retailers with no nexus or permanent establishment in the relevant State:

This list is particularly interesting as each of these online sales tax developments occurred in the first five weeks of 2017.

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What is more than likely to happen is that the United States will take a federal stance as the current State-by-State approach simply isn’t tenable. When this happens it is highly unlikely that they will simply ignore foreign providers of digital services.

This would be the most significant digital taxation move since the European Union (EU) introduced new place of destination value-added tax (VAT) rules in January 2015.

There is a groundswell of opinion developing in States across the U.S. that will most likely lead to a tipping point on a Federal level.

There is a state of flux in the U.S. right now regarding the future taxation of online sales.

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Note: Taxamo content is created for guidance only, please consult your local tax advisor for professional advice.

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