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.  

Comments

[Lily]

Interesting. Valuable content.