Whitey - 11:42 pm on Jun 10, 2011 (gmt 0)

If Amazon retained their position they would just increase their liability potential. However they may have a liability now anyway that they may need to pay out on with little hope of recovery. What happens if every State and Territory in the world follows this tax lead ?

Actually, it's very messy still after nearly 15 years of confusion in e-commerce .

The goods and services type of taxes are more easy for tax authorities to administer. Essentially there is a point of sale and a point of receipt, and the goods and services get taxed accordingly on a consistant basis. But for affiliate referral sales it get's more complex and usually relies on the residency element of the contract between affiliate and advertiser.

The best thing is to shift your entity to another place of residence which escapes this. Don't think it is just this State or Country causing headaches, and do remember the tax beaurocrats have an obligation to uphold laws that they interpret support their role.

Shifting to another tax jurisdiction is not without it's headaches. Related feess and business controls come into play. If the local jurisdiction starts to play games some types of business' can find themselves paying a lot of money as well.

Governments and tax authorities are challenged all over the World and really this Amazon thing just highlights " well it's getting too hard " .... "lets move on". Anyone caught in this mess probably ought to consider the same. Affiliates with fine margins on high volumes might need to think along these lines. Business' with good margins may see the benefit of just paying the taxes.