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Tax jurisdictions

A tax jurisdiction's an area with a designated authority for tax purposes.
The area for a tax jurisdiction can include:
  • A country - For example, the U.S. has a federal tax jurisdiction as well as tax jurisdictions at the state, county, district, and city (municipality) levels. The U.S. doesn't have a sales and use tax at the federal level. Individual states may impose sales and use tax at different rates.
  • A group of countries - For example, each member state in the EU shares a common tax jurisdiction for collecting VAT via the OSS and IOSS schemes. The EU oversees national tax rules regarding the free flow of goods and services while the national government has a direct role in collecting taxes and setting tax rates.
  • A province - For example, Canada has a federal tax jurisdiction and provincial tax jurisdictions. The federal tax jurisdiction imposes a Goods and Services Tax (GST) on most goods and services in Canada and on certain imports. The type of sales tax imposed at the provincial level depends on the province.
A tax jurisdiction may impose its own registration requirements based on the type of product or service and the number of sales. Additionally, a business may not be able collect taxes in a tax jurisdiction without being registered first.
A nexus (for U.S. tax jurisdictions) or an establishment (for non-U.S. tax jurisdictions) is a commercial connection that a business has with a particular area that qualifies it for tax. When a business has nexus or establishment, it means the business is obligated under nexus tax laws to collect, remit and report taxes in the tax jurisdiction.
Your company:
  • May have only nexus or establishment in a tax jurisdiction.
  • May be required to only register with an authority in a tax jurisdiction.
  • May have nexus or establishment in a tax jurisdiction and may be required to register with an authority in the tax jurisdiction.

This article applies to:

  • Product: ONESOURCE Determination,ONESOURCE Indirect Tax