Avalara's GM of Telecommunications Tony Susak spoke to TechRepublic's Teena Maddox about telecom taxes at MWC Americas 2018."What we offer is, telecom clients, transactional tax and regulatory compliance," Susak said. "It's a unique space in that most people don't understand the complexity of the telecom taxation. Most people are used to walking into a store, buying a widget, getting taxed a 6% or 7% sales tax rate.
"In the telecom world, one transaction could have eight different transactional taxes applicable to it, and that average rate is between 18% and 20%, so it's a material amount for companies, for product offerings.
"What we really do for our clients is a SaaS space tax engine with all the content for Internet of Things, cellular service, VoIP service, and what does that mean? That means that we actually, on a monthly basis, we update all the content. We update all the tax rates for over 12,000 jurisdictions across the United States, and, a SaaS solution, what that means for companies is we do all the heavy lifting. We do that on a monthly basis. Versus if they have an on-prem solution, we will have to send all that content, all the rates to them on a monthly basis. Their IT department will have to do UAT testing every month to make sure everything loaded properly into their billing system and then launch it. It's the future, we believe, and we've been very successful at it.
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"What we're finding is new companies, and it's a reason we're here at this conference, new companies are doing all this cool invention of new products. They're disrupting the market with Internet of Things, streaming video, and what we're trying to do, is stay ahead of the curve and, for non-telecom companies who are not used to this space, trying to protect them of all these myriad of telecommunication taxes.
"The other thing we do is also the bundling aspect of a service offering. Let's say a telematics, a car company, for example, that wants to provide telematics service and a voice service where people can make phone calls from their car, there are two unique product offerings or, in my world, in the transactional tax world, one is considered an information service that's not telecom, and it's only subject to sales- and use-tax probably in about 13 states. versus the actual calling from a car. That is a telecommunications. It's like having a prepaid calling card in your phone, and it has this myriad of telecommunications taxes associated with that service.
"What we always try to have our clients do is separate those product offerings because, if you bundle it, in my world, it's called tainting the bundle, and these things over on the telematics side is now, would now be considered telecom, and it just has a very uncompetitive advantage, if that happens."
Teena Maddox is a Senior Writer at TechRepublic, covering hardware devices, IoT, smart cities and wearables. She ties together the style and substance of tech. Teena has spent 20-plus years writing business and features for publications including People, W and Women's Wear Daily.