Everything You Need to Know: Cloud Tax

Posted on October 05, 2012

Posted by Gerben Meijer in Industry News 0 Comments

You are taxed for working, taxed for living, taxed for buying, taxed for selling, taxed for owning property, and when you buy air for your tires, gas for your cars and boats and planes, bottled water to drink you’re taxed on that too. Did you read the previous sentence carefully? You’re taxed for water, air, life, home, and just about every other aspect you can be taxed for.

Now the government is thinking about taxing the virtual world of cloud computing. Taxing something that essentially doesn’t exist without a human being to connect to it. It’s virtual. Next the government will want to charge you for your existence in parallel universes.

A few states, such as Vermont, have already tried to file their own cloud use tax and make it retroactive to the date when cloud was first launched. It’s not flying right with a lot of companies that depend on cloud to cut their expenses and increase their bottom lines. Overturns of these laws and petitions against them where they are signed into being are not faring well, but people who are against the usage tax are still trying.

Even with laws in place, enforcement proves to be a challenge. Arguments on both sides of the fence point to a need to regulate, but that means taxes, which nobody wants.

What complicates matters even more is the fact that if someone in Illinois clicks through to a site in New York that carries an affiliate nexus law which charges taxes on cloud use, should the visitor be charged by New York? It gets confusing because no one knows where or who to give the usage tax bill to when not every state is on board with this taxation procedure.

A consumer, then, on the other end of things is probably wondering when it all boils down and gets sorted out, because chances are, they will have to pay something. Paying extra on top of a product or service for something you’re using and weren’t getting charged extra before isn’t exactly a consumer friendly way of doing business, but that is exactly how it would go down.

Petitions and citizens exercising their rights against unfair practices is about the only way to get the government to pay attention to the taxation and view it as a hindrance to growth, rather than a boost to the economy.

No Taxation Without SaaS-afication

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