Is Your Business Subject to Communications tax?

Introduction

Telecom taxes associates a range of federal, state, and district taxes. The collection and submission of these taxes is the responsibility of the telecom companies. These taxes are often misinterpreted as a standard sales tax, but they are much more complex than it. The telecom services are highly taxed and are just behind the petroleum and rental car industries.

Numerous types of taxes and other requirements involve a lot of paperwork which a single person can’t do. Thus, there are several communication tax compliance resources that can be used to ease your job, and one of the companies which provide these services is Faster.

Services Which are Liable to Pay Communication Taxes

1.Voice Calling

Voice communication is a traditional way of communication and has been used since the inception of humanity. However, telephonic voice communication services are operated via wireless, wireline, and VOIP mediums. The voice communication services are provided by different industries such as telecom, unified communications provider, and SaaS industry. However, as the modes of communication are changing, these businesses are shifting towards adopting more social, data, and video-friendly means.

Although, introducing new means to communicate for their customers won’t lower the tax liabilities on the companies. As the number of means of communication provided by the companies increases, especially by the unified communication provider, the taxes also change. However, not many firms know about these taxes. They are entering the communication industry without gaining prior knowledge of tax compliance. Hence, they can fall into tax compliances issues in the future.

2.Video Calling and OTT Communication

In the recent past, especially due to COVID-19, most of the businesses have shifted to work from home settings where the employer manages the communication between employees through video calling apps such as zoom and skype. Moreover, the growing usage of OTT platforms such as YouTube for live streaming and on-demand options has influenced many people to introduce new platforms for utilization.

However, as the boundaries between industries are fading, communication services are largely being offered by different companies in different domains such as telecom, cable, satellite, and media companies. Due to such a vast variety of domains, there is an ambiguity in the taxation system as different taxes are applicable in different fields. Thus, knowing which tax is applicable to your company is difficult to determine.

Also Read: Can Tax Debt be Negotiated?

3.Tech Companies

Although technological companies don’t consider themselves to be liable for paying communication taxes, they can actually fall under the slab of communication taxes. These companies are- SaaS solution providers, networking companies using circuits, VPN, web hosting, etc. Therefore, if these companies are not paying the taxes currently, they are at risk of tax compliance.

Moreover, the introduction of the 5G network will also have an enormous impact on the taxation system. Also, with the introduction of the 5G network, the usage of sensors in the devices will increase, which will affect the communication taxes incurred on a company. Furthermore, currently, the communication sector is finding its implications in cars in-vehicle telematics, autonomous vehicles, etc. Thus, with passing time, the implication of communication taxes are inadvertently going to increase.