Tax My SaaS

With the big news coming out of France that the government is considering implementing a tax on Google advertising the SAAS industry needs to take notice. France is not picking on Google, they are going to tax all online advertising, which according to many reports the annual revenue of Google's online advertising is over $2 billion. I am not going to comment on the tax, we will leave that debate to others. However, the ability for any level of government to implement a new tax with out much advanced notice should be a major wake up call for all SAAS providers. 

 

As a SAAS provider you need to make sure your billing system / provider can handle multiple levels of tax regimes, account for taxes collected and provide the appropriate reports?

 

Currently in the US, software is defined by State law and state sales tax. However, when an end user downloads the software, what tax jurisdiction has the right to tax, is it where the software is downloaded from or where the software is being downloaded to or both? Many States are attempting to figure out this dilema. According to a report from Grant Thornton, Taxing software as a service: What SaaS providers may not know about their tax liabilities, "Massachusetts and Texas have taken informal positions that SAAS is taxable." 

 

If we look to France we can learn and be prepared for the potential effects of a new tax. We must realize that the effects of new taxes could be complex and potentially add cost to the SaaS delivery model 

 

With an increasing debt load and 48 states and thousands of local governemts that have financial hardships, the possibility of a new tax being implemented at many levels is very real. 

 

As a SAAS provider you rely on your partners to be prepared. 

 

At Monexa we have been delivering billing solutions for over 10 years to hundreds of clients in every state and province in North America. Our billing software can accomidate multi-level taxation schemes. Further, we stay abreast of the tax news coming from all levels of government. 

 

Let the news out of France about the Google Tax be a wake up call for all SAAS providers.  

SaaS, cloud and subscription billing and the Olympics in 2010

2010 is looking pretty exciting for us. We had a great 2009 as our business in the SaaS and Cloud billing market really took off.

On top of that, the 2010 winter Olympics are about to kick off in our corporate hometown of Vancouver so the mood around the Monexa office is pretty good.

So, what's happening in 2010 for us? Gartner is fully on board with the SaaS and Cloud Computing market. In fact, they have named Cloud Computing as one of the top 10 strategies for 2010:

Cloud Computing. Cloud computing is a style of computing that characterizes a model in which providers deliver a variety of IT-enabled capabilities to consumers. Cloud-based services can be exploited in a variety of ways to develop an application or a solution. Using cloud resources does not eliminate the costs of IT solutions, but does re-arrange some and reduce others. In addition, consuming cloud services enterprises will increasingly act as cloud providers and deliver application, information or business process services to customers and business partners. Read the full gartner comment

Monexa is a SaaS Application itself and many of our customers are SaaS/Cloud companies. As you can imagine, we're deeply connected to the overall growth of the SaaS community and not just our subscription billing market. Past failure to predict the future has never gotten in the way of trying again. So, here's what we think 2010 will look like:

• Vendors, Vendors, Vendors
  •  Although the leading SaaS provider Salesforce has reached over $1 billion in revenue, Microsoft and Google are big players; 2010 will be marked as the year that new vendors and applications hit the mainstream. Microsoft will be pushing the Azure platform to their army of ISV's so we expect to see a ton of new cloud services out of that group.
    
• End User Uptake
  •  With more and more cool apps hitting the market, it will be the end user that decides the success of the market. As market players we need to work together to demonstrate reliability, convenience and value for the consumer dollar. Further, as we have seen with Google and Microsoft we need to provide better Service Level Agreements if we expect the enterprise to jump fully on-board.
    
• Customer Service
  • A key differentiation in the market will be good old fashion customer service. Just because you can create an application that can be used by anyone in the world does not give application providers a free ride on customer service. A vendor might be able to get away with little customer service or a help desk forum on their site when they offer the service for free but enterprise customers expect more.
• Taxation of online services 
  •  An unknown in the market is how the each state will tax cloud services. There are rumblings even now that new taxation rules will be introduced soon. This will have a big impact on not only our business but the entire cloud market.
    

Monexa will continue be a leader in the Cloud billing market and we look to 2010 as a great year for the market and our company.

As we move into 2010 - what are your predictions? Link us to your blog posts on the subject...