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by tzs
2015 days ago
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Microtransactions are difficult legally, due to taxes. If someone in state/country X buys something from a site in state/country Y, both X and Y may levy taxes on that transaction. Many have thresholds for small businesses, where you don't have to collect taxes if your total business volume is below some threshold. For US states, the threshold is often of the form "more than $T total sales OR more than N sales". With microtransactions, it is easy to exceed N sales even though you are not actually collecting much money, and then the costs of preparing and filing your quarterly sales tax reports can exceed your revenue. Advertiser supported sites don't suffer from this problem. If someone in X visits a site in Y and Y gets payed by an advertiser for showing an ad to that person, the site does not have to worry about taxes in X, and in Y the ad revenue will just be income that gets dealt with on their income taxes. Until we can get microtransaction-friendly cross jurisdiction sales tax reform microtransactions are going to have limited viability, at least for sites that want to operate legally. |
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