Georgia Gov. Brian Kemp signed H.B. 56 into law on May 2, 2023, which implements a new tax law subjecting sales and purchases of specified digital products, other digital products, and digital codes to the state’s sales and use tax, effective January 1, 2024.
Included in the definition of “specified digital products, other digital products, and digital codes” are:
- Digital audio-visual works, such as downloadable videos, movies, etc.;
- Digital audio works, such as downloadable music, .MP3s, audiobooks, podcasts, etc.;
- Digital books, such as downloadable eBooks, .PDFs, etc.;
- Digital codes, which are codes or keys enabling or activating a right to obtain specified digital goods or other digital goods; and
- Other digital goods, such as artwork, photographs, periodicals, newspapers, magazines, video or audio greeting cards, or video games or electronic entertainment.
For a digital product to be considered taxable, it must be permanently transferred or provide the right of permanent use to the end-user; transactions for subscriptions or those with conditions of on-going payments by the end-user are not included in the definition of digital products, other digital products, and digital codes that are subject to the sales and use tax.
The new tax law also rewrites/clarifies the exemption for sales and purchases of prewritten computer software, such that those transactions specifically exclude those digital products listed above.
Sellers and purchasers should ensure their tax collection and compliance processes are updated to reflect these tax law changes in Georgia, as transactions occurring on or after January 1, 2024 that involve the sale or purchase of these types of digital products will be subject to the Georgia sales and use tax.