THE MYTH: Data and Internet Access services are “the same,” and neither is regulated nor subject to transaction taxes (sales, use, excise, utility, etc.).
THE REALITY: The belief that “Data” and “Internet Access” services are exempt from regulation and taxation is a commonly-held mis-perception. Regulation & taxation of “Data” and “Internet” services is a grey area of the law. There are varying degrees of regulation and taxation depending on the specific factual details regarding the nature, type, and geographic jurisdiction of the service offering.
De-Mystifying the Regulation & Taxation of Telecom, Data & Internet Access Services
There is a widely held belief among businesses (including many service providers, themselves) that all non-voice data and Internet Access services are not subject to either regulation or taxation. The origin of this mis-perception likely derives from decades of “siloed” regulatory and tax frameworks that provided clear delineations for older, “pre-Internet” forms of communications technology.
However, technological convergence brought about by the commercial Internet caused such regulatory and tax regimes to lag behind the rapid developments in telecommunications technology, thus revealing a checkerboard landscape where data and Internet Access services may be regulated and/or taxed in some jurisdictions, but not in others.
The purpose of this Educational Advisory is to dispel the Myth & Mis-perception that all non-voice data and all Internet Access services are exempt from regulation and taxation, as well as to demonstrate the complexity and fluidity of the laws, regulations and policies governing these issues.
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