In this tutorial we look at how to price a digital product, for example, an ebook, courseware, infographic, or other product that you plan to sell using amazon Kindle, Shopify, Clickbank, eJunkie, or 1ShoppingCart among others.
What’s the definition of digital goods?
One definition for the Wisconsin Finance Dept states it as:
“A “digital good” can be any product that it is transferred electronically to the purchaser, other than pre-written computer software.
Digital goods include versions of products that have historically been produced and transferred as articles of tangible personal property that are now produced and transferred electronically as digital files. A digital good can be previously recorded sounds or images such as music, movies, or video or electronic games that are transferred electronically to customers by retailers of such products.
Example of Digital Goods
An example is “recorded music produced and sold as a digitally-encoded file which is transferred electronically to the purchaser. Recorded music transferred electronically is a digital good.” http://www.revenue.wi.gov/faqs/ise/diggoods.html
Examples of digital books include:
- Novels and autobiographies
- Encyclopedias, dictionaries, and repair manuals
- Directories, such as phone directories, business directories, zip code directories
- Educational textbooks
Examples of what is not a digital book:
- Newspapers or other news or information products transferred electronically, such as a website maintained by or for a local television station which posts current news, weather and sports information for viewing by the person accessing the website.
Note (1): “Newspapers or other news or information products,” while not subject to tax as a “digital book,” may be subject to tax as an “additional digital good.”
Note (2): Newspapers are exempt from sales and use taxes, regardless of whether they are transferred electronically or in paper form.
- Periodicals, such as magazines issued weekly, monthly or at some other regular interval of more than on one day, scientific journals, trade publications, and newspapers issued at regular intervals other than daily.
Note: A “periodical,” while not subject to tax as a digital book, may be subject to tax as an “additional digital good.”
- Chat room discussions
Note: A “blog,” while not subject to tax as a digital book, may be subject to tax as an “additional digital good.”
What is a digital product?
It is transferred electronically. (See section 201(8) of ESHB 2075 or section 203(8) of SHB 2620)
Digital goods (movies and music, etc.)
Digital automated services (services that have been automated)
The bill also covers remote access software, which is now subject to sales and use tax. (See section 201(7) of ESHB 2075 or section 203(7) of SHB 2620)
What is a digital good?
- Sounds (music)
- Images (movies, pictures
Next week we look at VAT on Digital Goods.