Texas moves to remove tax on delivery app and marketplace fees

Texas Comptroller Don Huffines has signed an executive order to amend a tax rule that classifies certain fees paid to online platforms as taxable ‘data processing services.’ The move aims to address what the Comptroller’s office describes as an overextended interpretation that resulted in two layers of taxation on many transactions.

The affected fees involve various digital services, including food delivery apps like DoorDash and Uber Eats, online marketplaces such as Amazon, eBay, and Etsy, as well as ride-sharing, short-term rentals, and pet-sitting platforms. Under the previous administration's rule, businesses and individuals using these platforms could owe tax on the fees charged by the service providers.

While the change may reduce the tax burden on businesses and platform users, it is not certain that these savings will be passed down to consumers in the form of lower prices. The proposed rule change will undergo a 30-day public comment period before it is formally amended.