How Taxing Schemes Affect Businesses

This article on AMD looking to reduce software costs caught my eye. I
originally read it because I'm looking into the costs associated with
putting software on a cloud, like EC2, and how it is more expensive
than the promoters say. But the article took off in a different way.

http://www.infoworld.com/d/data-center/software-costs-concern-amd-in-data-center-hunt-169750

Advanced Micro Devices is looking at the costs of software licensing
and taxes as it aims to reduce the number of data centers worldwide,
company officials said this week.

...

Local taxes are also a concern, AMD officials said. "A lot of
governments are looking at ways to exercise their taxing authorities,"
Painter said. "They want to collect tax on licenses."

...

AMD was surprised with the differences in software licensing and
taxation costs between locations, officials said. AMD has data centers
in countries including Malaysia and the U.S., and engineering tasks
are executed in real time across the virtual grid of servers. The
cloud approach is more efficient than earlier efforts of reimaging or
repurposing servers, but with so many transactions and engineers,
software-related costs are becoming an important factor in the
company's budget.


If you are a company with a lot of licenses for desktop software, or
an enterprise license for software, a tax can be a HUGE hit.

Comments

[MIB]

In this case the licensor wouldn't pay the tax, but the licensee -- in countries or jurisdictions that assess a VAT. Presuming the tax rate is set at a reasonable point, it's a cost of business easily absorbed by the entrepreneur.