Starting July 1, 2025, Maryland will apply a reduced 3% sales and use tax rate to data or information technology services and system software or application software publishing services. The state’s standard tax rate is 6%. The tax will apply to both business-to-business (B2B) and business-to-consumer (B2C) transactions, with the legislation allowing for potential rate increases in the future. Maryland will, as a result, adopt a multiple points of use (MPU) exemption starting July 1, 2025.

The bottom line: In early 2025, Maryland considered expanding taxes to cover more B2B services at a 2.5% rate. The proposal failed, despite estimates that it would have raised about $944 million in 2026. The state now faces a difficult situation: it plans to cut $2 billion from its budget but still needs to find $1 billion in new tax revenue to balance its books. Officials want to expand sales taxes to modernize what they consider an outdated tax system.

‍

Washington’s governor signed SB 5814, a bill that will expand the state’s retail sales and use tax to include the sales of digital advertising services starting October 1, 2025. The tax will apply to digital marketing, data processing, custom software support, and online advertising services. It will exclude print and broadcast ads.

The bottom line: Many expect this bill to be challenged and determined as discriminatory against internet-based services according to the Internet Tax and Freedom Act (ITFA).

The Albanian tax authorities issued an official notice to multinational companies providing digital services to final consumers in the country. Albania now requires foreign companies selling digital services to Albanian consumers to appoint a local tax representative, register for VAT, and charge 20% tax on sales. 

The bottom line: This change applies to providers of telecommunications, software, digital content, online education, and other electronic services sold to individuals or non-VAT registered businesses in Albania. Companies that fail to comply within a reasonable timeframe will face legal action from the Albanian Tax Administration.

Washington state lawmakers have passed a bill requiring ad agencies to collect sales tax on digital advertising services. If approved, the bill (SB 5814) would force agencies in Washington to collect 7.5% to 10.6% sales tax when providing services like creating digital ads, analyzing performance, or planning online campaigns. 

The bottom line: Most states don’t tax digital advertising services yet. In recent years, as digital ad revenue has grown, states have explored specialized digital ad taxes based on gross receipts rather than traditional sales taxes. Washington’s bill could become influential, as the state’s tax policies (which often reflect input from major tech companies) have previously set precedents for other states expanding into digital taxation.

South Africa canceled its planned VAT increase following political opposition. The proposed 1% increase over two years, aimed at raising government revenue, faced resistance as the country struggles with slow economic growth and rising living costs. 

The bottom line: South Africa’s VAT rate will remain at 15%. The country’s finance ministry stated that no immediate alternative revenue sources will replace the canceled VAT increase.

Finland has proposed a 0.5% VAT rate reduction in the country’s mid-year budget discussions. The VAT rate would drop from 14% to 13.5%, and this change would go into effect on January 1, 2026. 

The bottom line: Finland recently made additional updates to the country’s VAT rate. In September 2024, the country increased its standard VAT rate to 25.5%. Finland’s finance minister implemented this tax increase to comply with the Euro currency membership requirement that government deficits cannot exceed 3%.