Document Type
Article
Publication Date
7-18-2013
Abstract
“Cloud computing” raises important and difficult questions in state tax law, and for Federal taxes, particularly in the foreign tax area. As cloud computing solutions are adopted by businesses, items we view as tangible are transformed into digital products. In this article, I will describe the problems cloud computing poses for tax systems. I will show how current law is applied to cloud computing and will identify the difficulties current approaches face as they are applied to this developing technology.
My primary interest is how Federal tax law applies to cloud computing, particularly as the new technology affects international transactions. I am not so interested in the current state of the law as I am in identifying the problems confronting tax administrators as technology creates a changed economic system. After identifying the problems, I will suggest that cloud computing (like other technological changes) is not always compatible with current rules for taxing activities in multiple jurisdictions. Therefore, tax fairness may require that new standards be used to allocate income among jurisdictions.
But beyond that, I hope to explain some of the particulars of the cloud structure. In doing so, it will become apparent that the significance of cloud computing goes beyond the local and international tax areas that have been identified as problem areas in the past.
Keywords
State & federal taxation, Internet sales, taxing software in the cloud, hosting out-of-state servers, nexus, foreign income taxation, international transactions, income allocation among jurisdictions, defining a permanent establishment, collecting tax judgments in foreign court, int’l tax neutrality
Publication Title
Tax Notes
Repository Citation
Shakow, David, "The Taxation of Cloud Computing and Digital Content" (2013). All Faculty Scholarship. 475.
https://scholarship.law.upenn.edu/faculty_scholarship/475
Included in
Accounting Law Commons, Communication Technology and New Media Commons, Comparative and Foreign Law Commons, Computer and Systems Architecture Commons, Computer Law Commons, Constitutional Law Commons, Data Storage Systems Commons, E-Commerce Commons, Jurisdiction Commons, Law and Economics Commons, Public Administration Commons, Science and Technology Law Commons, Science and Technology Policy Commons, Science and Technology Studies Commons, Taxation Commons, Taxation-Federal Commons, Taxation-State and Local Commons, Taxation-Transnational Commons, Tax Law Commons
Publication Citation
140 Tax Notes 333, July 22, 2013.
71 Tax Notes International 363, July 22, 2013.
69 State Tax Notes 221, July 22, 2013.