As technology companies develop and their range of products / services diversifies, there is the very real chance that for tax purposes, the business changes into a telecoms one. When this happens, it has a major impact on how the company has to do business.
For companies within the transportation, health care, software, gaming, industrial, agriculture, and other industries, this is happening more often thanks to the emergence of standalone Internet of Things (IoT) solutions, smart devices that can make calls, and click to chat / call software.
Because of this, these companies are, for the very first time, being faced with the complexities of taxation on communications. Company owners therefore need to start considering whether or not there is a risk that their business may be seen as, by the taxman, a telecoms one. Where this is the case, you also need to prepare your business for a Telecom audit.
What To Look Out For
Knowing where the thin line that operates between a regular company that pays consumption tax and a telecoms company that has to deal with highly complex telecoms taxes lies is of vital importance.
Whilst bringing an innovative new product / service to the market provides tech companies with the opportunity to access a new and potentially larger market share, these same innovative solutions can make these companies fall into the realms of becoming telecoms companies – thus making them liable to large taxes of at least 12 percent.
Because of the budget constraints and shortfalls that government agencies and states are currently under as a result of the declining state of the telecommunications services industry, these bodies are actively on the look out for and conducting audits of companies in order to find ones that are now eligible to pay communications tax.
If a company is not correctly prepared for this, the consequences can be dire. Some of the main signs and indicators that companies should look out for on whether they are or already have entered into the field of telecommunications tax include:
- Your marketing – when a telecoms tax auditor is assessing your business, the first place that they go to is your website and marketing materials to learn more about the products and services that you offer.
- Your use of telecoms terminology – using words in product information pieces, such as call button, Internet calling, voice calls, phone, video conferencing, voice activated calling etc. will all attract the attention of the above mentioned bodies looking for new telecoms companies to tax.
- Your activities centre around communications – introducing products and devices, that support video chat, makes calls, and can be synced to a telephones monthly data plan, then it takes it into the realms of telecommunications. Similarly, if the product allows users to make connections through Voice over Internet Protocols (VoIP), then it too opens itself up to being heavily taxed. Also, when products work through the Internet of Things (IoT) use their own dedicated cellular internet connection, then they may be subject to greater levels of taxation.