- Michigan Department of Treasury issued a letter ruling on sales tax treatment of services accessed via remotely-hosted software as a service (SaaS) or through a free application
- Taxpayer based outside the US sells subscriptions to access information hosted in the cloud through a web portal or free downloaded application
- Ruling states services are fundamentally SaaS and majority are unattainable without internet access
- Sales tax in Michigan is imposed on retail sales of tangible personal property, including prewritten computer software
- Ruling concluded that SaaS services that do not involve downloaded software are not taxable
- Services used through software downloaded to mobile devices are considered taxable tangible personal property
- “Incidental to service” test is used to determine if transaction is a transfer of tangible personal property or provision of a service
Source: aprio.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
