What is the taxation of digital services?
In Minnesota, digital services are taxed in the same way as other services. This means that the state taxes sales of digital products at their standard 6.875 percent rate. This applies to services like streaming video, music, and online software, as well as digital products such as e-books and digital photographs. The State of Minnesota also requires businesses that sell digital products or services in Minnesota to collect and pay sales tax on those purchases. This includes both Minnesota customers as well as out-of-state customers who purchase digital products from Minnesota-based companies. The only exception is if the seller does not have a physical presence in Minnesota. If a business does not have a physical presence in Minnesota, they may still be required to pay taxes on digital products in the state. The Minnesota Department of Revenue is making sure that companies that sell digital products in the state are required to pay the sales tax. This means that companies must keep track of the activities they engage in within the state, as well as keep records of their sales in Minnesota. In short, Minnesota taxes digital services the same as other services, and businesses must collect and pay sales tax on purchases from Minnesota customers, as well as out of state customers who purchase digital products from Minnesota based companies.
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