A tax jurisdiction is an area subject to its own tax regulations.
A tax jurisdiction can be a country, region, group of countries, province, state, city, county, district or any other area with a designated authority for tax purposes. For example:
- In the United States, there are thousands of jurisdictions applying sales or use tax.
- Each EU state has its own jurisdiction but they all share a common jurisdiction for VAT via the EU OSS / IOSS schemes.
- In Canada, there's a federal jurisdiction and four provincial jurisdictions (Québec, British Columbia, Manitoba, and Saskatchewan).
A businesses cannot collect taxes in a particular jurisdiction without being registered for tax collection with their tax authorities first. That's called a tax nexus.
🔎 You can read more about taxes around the world on this article from our blog.