In SaaS, you owe sales tax depending on where your customers are located, not where you, the seller, are based. Say you’re a scrappy Danish startup seeing traction from customers in India, for example. You owe tax on any and every sale. They have no thresholds. This means you need to register there and charge the right amount of tax when necessary. In India, you have to pay sales tax if you’re selling to individuals or consumers. This means you’ll need to stay on top of who exactly your customers are, as well as where they are.
But that’s nothing compared to selling in the US, which has over 11,000 tax jurisdictions with different rules on if, what, when, and how software companies owe sales tax.
It’s complex stuff to stay on top of, but if you get it wrong the consequences will be huge. We have a dedicated tax team who spent over eight months trying to navigate the registration process in the UAE, and we still got caught with a 300% sales tax penalty.