What is the taxation of digital services?

In Tennessee, digital services are subject to taxation. This includes services that are created, stored, and delivered by digital or electronic means. This includes digital downloads of products, streaming services, subscription services, and services from app stores. Businesses must pay sales and use taxes on digital services just as they would for tangible products. Customers may be subject to paying taxes on digital services, or they may not be depending on the type of service. For example, digital streaming services may be subject to taxes, while digital download services may not be. Customers will likely pay a sales tax for digital services if the services are delivered to a Tennessee address. Businesses must also pay a gross receipts tax in certain instances. For example, businesses providing digital or streaming services are subject to a franchise and excise tax rate. Anytime a digital service is purchased from a retailer or service provider in Tennessee, the retailer or provider must collect a sales and use tax. That tax is then remitted to the Tennessee Department of Revenue. The taxation of digital services can be complicated. For more information, businesses and customers should contact the Tennessee Department of Revenue for specific tax rates and rules.

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What is the taxation of digital services?

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