By Julie Martin, MNE Tax
Maryland legislators on January 8 introduced a bill proposing a new tax on the revenue of large companies that advertise to individuals located in Maryland through a website or other digital interface.
If the Maryland bill passes, the tax would be the first digital services tax on gross revenue enacted by a US state.
The proposed tax, introduced by Bill Ferguson (D-Baltimore) and Thomas V. Mike Miller (D-Calvert), seems designed to hit firms like Google and Facebook. It would apply to companies with $100 million or more of annual global gross revenue.
The tax would be imposed on revenue from advertising displayed to individuals if the user’s IP address indicates that the user is located in Maryland or if it is reasonably suspected that a device displaying the advertising was used in Maryland.
The tax rate would range from 2.5 to 10 percent of gross advertising revenues. The rate would be based on the company’s global annual gross revenues, with the 2.5 rate imposed on companies with global annual gross revenues of 100 million or more and a 10 percent tax rate set for companies with 15 billion or more revenues.
The proposal comes at an awkward time as the US federal government trade representative has recently concluded that France’s digital services tax on the revenue of large multinationals discriminates against US firms and has proposed retaliatory tariffs. The French tax hits both advertising and “intermediary services.”
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
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