iTunes Surtaxes

by Erica Sadun

According to CNet, state politicians around the US are eyeing new digital music and movie taxes to boost local revenues. I already pay nearly 8% sales tax on my iTunes Music Store purchases.

New Jersey Gov. Jon Corzine, a Democrat, proposed in his budget...that "downloaded music and videos" be taxed starting Oct. 1. The state tax agency expects legislation to be introduced in June.

MacNN reports that Apple is considering moving their UK operations to one of the Channel Islands in order to be able to sell to British customers while avoiding the approximately 18% value added tax (VAT).


2006-04-14 11:29:01
If moving to the Channel Islands works in the UK, maybe Apple should move their US operations to there too, or to New Hampshire or another US state without sales taxes. With the Internet, it almost doesn't matter where you are.
Erica Sadun
2006-04-14 11:33:09
I believe the idea goes like this: If there's an Apple Store in your US city or state, you're liable for taxes regardless of where the corporate headquarters are located.
2006-04-14 17:15:28
But since you're not buying the music from the Apple Store, you're buying it from the iTunes Music Store, and you *can't* buy music at the Apple Store, I think it'd only count what state the iTMS is based in. (IE, if iTMS was based in a state without sales tax, and since you're connecting to them, and performing the transaction 'there', you shouldn't have to pay.)

IANAL though, so maybe I'm wrong, but that's how it works with mail order.

Erica Sadun
2006-04-14 17:21:08
I'm pretty sure that the following states tax music downloads: Alabama, Arizona, Colorado, Connecticut, Hawaii, Idaho, Indiana, Louisiana, Maine, New Mexico, North Dakota, South Dakota, Tennessee, Texas, Utah and Washington.

(Factoids via google!)

2006-04-15 08:24:15
I thought the Channel Island thing had been debunked?

It's also the case that the Channel Islands themselves are increasingly turning against people setting up shell companies on the Islands purely to get round UK VAT - there is a risk that the UK government would act to remove their 0% VAT priveledge.