Guidance sheds light on taxability of ‘enterprise computer systems’ in Maryland
The Maryland Comptroller of the Treasury has provided businesses with additional clarity on some of the tax changes made by HB 791, which recently updated the definition of a “taxable digital product.”
In the latest revision of the state’s Business Tax Tip #29, the comptroller states what an “enterprise computer system” includes, since these systems are specifically exempt from sales tax under the new bill – but the bill itself didn’t define what they are.
Per the state comptroller, an enterprise computer system would include:
- a set of software packages working together as an interconnected network
- a purchase or license of computer software for simultaneous use on multiple computers housed or maintained on an enterprise server, cloud server, or end users’ computers, or
- software designed to run a computer system, an operating program, or application software.
The tax tip specifically noted that if a business purchases software that isn’t designed for multiple users, doesn’t operate with a different business software solution or doesn’t interact with multiple computers, it’s not considered an enterprise computer system. So it would be subject to sales and use tax.
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