Back in 1959, Barbie took her first plastic steps to become the cultural icon that she is today. Living in that Barbie world meant driving to your local toy store and physically purchasing the doll and accessories. Physical products like this were and still are subject to sales tax, meaning the consumer pays tax at the time of sale and that tax is later remitted back to the jurisdiction by the retailer. But the same way that Barbie has evolved and expanded her wardrobe, sales tax has become more complicated.
For example, if you are a Floridian consumer, get ready for the upcoming Florida sales tax holiday, where toys (like physical Barbies) are considered a necessity and qualify for tax exemption during purchase. It’s the perfect time to get your Barbie Dreamhouse! On the other side of the selling coin, retailers must ensure they are prepared for the ins and outs of tax events and requirements. With a Barbie sold every three seconds, it’s imperative that retailers keep up with tax requirements so sales can flow smoothly.
It’s a (digital) Barbie world
It’s no doubt that Barbie can do anything, and with her most recent leap to the big screen, she proves she can captivate audiences in a new, refreshing and profitable way. Barbie, the brand, has been expanding beyond just physical dolls to where we are now. This digital Barbie world is thriving. Consumers can engage with Barbie in forms of streaming services like Netflix, social media like YouTube, digital games, and more. As businesses like Mattel respond to the rapid pace of change in consumer desire for digital forms, governments have adjusted how they consider taxation.
Many states have even gone as far as to update their tax codes to include provisions that explicitly address the taxation of digital products and services, sometimes doubling the research efforts a brand has in managing their taxing obligations. The application of sales tax to digital content can vary based on factors like the type of content, the method of delivery, and the location of the consumer. So, if you are a brand considering going digital with intellectual property, try to embrace these variables to ensure your brand will not be exposed to an undesirable sales tax audit.
The tax implications surrounding the expansion of Barbie’s brand from dolls to digital content serve as a blueprint, or should I say pinkprint, for the broader digital transformation occurring across industries. Jurisdictions are trying to strike a balance between maintaining tax revenues and ensuring that tax policies remain fair and relevant to the digital economy. These shifts call for a deliberate cooperation between policymakers, businesses and consumers to establish guidelines that reflect reality. Just like selecting the perfect accessory for a glamorous outfit, choose a tax solution that empowers you to keep pace with rapid advancements, so your brand is always on point.
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