I just watched the skill builder video on the new Gated Digital Content feature for TNEW. The feature includes the ability to restrict access to digital content sales based on country, and they explained the reason was for tax purposes. Our organization has only ever done in person events and have simply paid our sales taxes based on local laws. So no one here is familiar with the idea of being beholden to another country for tax revenue. Does anyone else understand exactly how this is supposed to work? Is paid digital content considered like some kind of "cultural" export? How would another country know about this and what means would they use to collect? Does this work on a state and local level as well?
I tried doing a google search but it appears tax laws for digital content already very confusing and could not find any resources that would answer my question outright.
I am not a lawyer or a tax accountant or an international tax expert, but my layperson's understanding is this:
In a number of countries, digitally delivered items are subject to local sales tax if the purchaser makes the purchase in the country in question (or in some cases, if they will receive the digital goods or services in that country). In other words, it doesn't matter where the seller is; what matters is where the constituent bought it and/or where they will "receive" it. This differs from a ticket to a live event, where what matters is usually where the venue is.
Since sellers may or may not want to learn the nuances of local tax laws in all possible countries, it is presumably easier to restrict sales to those countries that you know for sure would not require you to remit taxes for the sales (or for which you already have an existing process to do so). This avoids the need to attempt to comply with potentially complex and differing laws for dozens of other countries on a constituent by constituent basis. Instead, you avoid selling to them altogether.