Cleeng’s Merchant solution simplifies tax management for digital products like OTT services. Our platform provides streamlined tools and expert support to ensure compliance across borders.
Navigating tax regulations in the digital realm is increasingly complex. Taxes apply not just based on registration location but also to every area where subscribers access the service. Calculating and remitting taxes across multiple jurisdictions can be daunting, with non-compliance carrying severe penalties, including fines and criminal prosecution. Cleeng’s Merchant addresses these challenges, empowering businesses to manage taxes effortlessly and avoid costly consequences.
Tax management: an integral part of Cleeng Merchant
When you use Cleeng’s Merchant solution, Cleeng acts as your merchant of record.
As Merchant of Record, Cleeng’s Merchant is an end-to-end payment orchestration product designed specifically for OTT broadcasters. Cleeng’s Merchant deals with all payment activities from the user's payment request to your payout, from indirect tax* (VAT, GST, sales tax) handling to data intelligence.
As a Merchant of Record, Cleeng’s Merchant takes all liability and leverages advanced technologies to deliver its mission: to make legitimate users pay and to prevent non-legitimate users from paying. Cleeng's dynamic checkout engine ensures the correct collection of taxes and smoothly collects payments from 200 payment methods in an automatic, seamless, and compliant way. Indirect tax is automatically applied to publisher’s offers depending on local regulations, and Cleeng handles tax calculation, collection, tax remittance to tax authorities, and tax returns. Hence, profits (so-called broadcaster payout) that publishers receive from Cleeng are exclusive of VAT or sales tax.
What’s so complicated about the role of Merchant of Record:
- it takes a lot of time to comply with VAT tax: e.g. in Poland, only 98 working hours are necessary to comply with VAT
- it makes them liable for any potential penalty
- it requires deep knowledge of tax regulations per country
- it requires technical set-up to collect the right tax amount efficiently
- it requires discipline to remit tax to the right authorities at the right time
Cleeng’s Merchant meets these requirements with:
- local entities in the EU, USA, and UAE, and tax registration in these countries in addition to Canada, UK and Switzerland, allowing for close contact with local authorities and easier tax amount expertise
- expert payment tech team able to automatically calculate and collect the right tax amount
- dedicated full-time tax experts to remit the right amount and assess risks
- full liability for the countries we cover where we also handle tax audits
*Cleeng’s Merchant only handles indirect tax. Direct taxes (CIT, WHT, etc.) are handled by the publisher.
How Cleeng’s Merchant handles tax
Shopper country is where the tax is applied. Tax applies on the place where payment is done. We track IP addresses, convert it into zip code and then determine the place where the payment is made. To ensure tax compliance in different counties and states you operate in, Cleeng applies local regulations that affect the net and gross price the end users are charged, and therefore your profit (broadcaster payout).
- In USA, sales tax rate is different in each state, country, and city. It may differ even between streets. In some states, the state and local taxes are applied, so this is a very complex task. Therefore we use Avalara to apply the correct tax rate and calculate the tax.
- In all 27 EU countries, Switzerland, UAE, and UK the tax rate is flat and depends on country regulations. We use our internal system and one-stop shop to apply the correct VAT rate.
Read more about tax regulations and how they affect prices in different regions:
Important notice: our system is not built to handle the registration for tax in countries where we are not registered for indirect tax purposes. Broadcasters risk being non-compliant with their tax remittance and documentation.
For calculation, collection, and remittance, Cleeng is flexible to enable tax registration in new countries if both Cleeng and the broadcaster agree to it.
For documentation only, Cleeng can help broadcasters have adequate VAT, GST, and sales tax information.