Managing tax on communication services is extremely complex. Microsoft Corporation was facing a host of tax challenges:
- Unbundling individual comm services and capturing the detailed transaction results.
- Making taxability determinations and rating/calculating taxes, fees, and surcharges by applying a different comm or non-comm tax category to each unbundled component.
- Linking taxes across components.
- Rating single-month, multi-month, and multi-year billings upfront using both the simultaneous exclusive and tax-inclusive prepaid services across the different bundled offerings.
Taking Control of Complexity
To take control of that complexity, Microsoft needed a scalable, flexible, and function-rich comm tax solution that could support its sales channels—small-to-midsize business, government, education, large-volume licensing, and reseller and distributor channels.
The goal was to build a comm tax solution within the standard sales and use tax software package. Implementing multiple tax software solutions for sales & use tax, value added tax, and comm tax was not an option. Nor was the business willing to modify how it sold non-comm services.
Microsoft selected Vertex Indirect Tax O Series for the job. The company now has an in-house solution for communication services tax that functions across all billing systems and permits all existing business channels to leverage the same solution—regardless of differences in customer details or data quality.
Standard sales and use tax, GST, VAT, environmental fees, and other taxes are now calculated or exempted in the same system, and at the same time as comm services are unbundled and rated. The company has experienced significantly improved tax reporting and tax forecasting.
Microsoft’s vision was to calculate or rate all transaction taxes, surcharges, and regulatory fees and maintain all exemptions on a single platform. They enabled this vision with Vertex O Series.
Explore our communications services tax solutions.