I wanted to sell credits on my web site for 10 cents per credit. You spend the credits on Games/Content people made. The developer can take a min of 500 credits and cash out to US dollars via PayPal. 1 credit = 8 cents pay out. 2 cent goes to the site as profit/processing fee. Plus the users are all over the world. How would sales tax work in this system or would sales tax not apply to the site selling the credits. I am thinking it would be up to the devloper to pay sales tax. I think taxes would work this way:
The company would only pay income tax on the profit of 2 cents, not paying anything of the money just sitting as no one cashed out, so the money is their waiting to be cashed. Since its only really a Currency covert.
Then the developer who cashes out will have to do their own sales tax. So they would get a list of how many credits was paid by what users and get their state they listed.
Is this correct? Thinking about adding a Credit System to my hosted app platform.
The company would only pay income tax on the profit of 2 cents, not paying anything of the money just sitting as no one cashed out, so the money is their waiting to be cashed. Since its only really a Currency covert.
Then the developer who cashes out will have to do their own sales tax. So they would get a list of how many credits was paid by what users and get their state they listed.
Is this correct? Thinking about adding a Credit System to my hosted app platform.