Pokémon Go is learning an important lesson when it comes to international business – do your research.
Niantic, the company behind Pokémon Go, hosts local events around the globe where players can play together and find unique Pokémon. Several of these events are named “GO Fest,” or “Safari Zone” after a location in the original Game Boy games. Tickets to these events have been made available through a lottery-type system where players can enter to win free tickets for themselves and one friend.
This year, Niantic is organizing a Safari Zone in Liverpool, where players can purchase £12 standard tickets or £18 early access tickets. But, Niantic neglected to do its research.
Pokémon Go players contacted the UK Advertising Standards Authority (ASA) after learning about the “hidden” taxes and fees associated with the Safari Zone tickets. It was only at checkout that players saw an extra £3 to £4.20 in taxes and £3 online ticketing fee added to their cart – players didn’t feel that Niantic was transparent about the actual cost of the event tickets.
While tax can be added on to advertised base prices in the United States, the ASA requires sellers to include “non-optional taxes, duties, fees, and charges that apply to all or most buyers” in their quoted prices. Niantic has since apologized and updated its pricing, but it learned an important lesson in international business – do your research.
While we live in an age where international business can be done at the click of a button, it’s important to remember that different countries have different rules when it comes to providing goods and services.
If you plan on doing business in other countries, for example through your own website or on a platform like Etsy, you need to understand the rules and regulations in the countries where potential customers reside. Two recent examples come to mind:
General Data Protection Regulation
If you run your own website, you’ll need to take a look into the General Data Protection Regulation (GDPR). Under the UK Data Protection Act 2018, as of May 25, 2018, websites that service Europeans and process their personal data must comply with the GDPR. Fines for failing to uphold these standards can range from 500,000 – 20 million euros or 4% of annual turnover.
Some examples of GDPR compliance include:
Pausing cookies until users consent to their use
User consent to accurate and specific information about data processing
Clear and accessible plain language about data processing
Documenting all user consents
Allowing users to withdraw their consent at any time in an easy manner
Renewing user consent every 12 months
Wayfair Sales Tax Changes
After the 2018 Supreme Court South Dakota v. Wayfair decision, a physical presence is no longer required to collect sales tax. Effectively, you’ll need to collect sales tax in any state you do business in.
You may have a safe harbor from collecting sales tax if it would cause an undue burden, but speak to a tax professional before using this reasoning. A tax professional will also be able to help you organize your taxes among states with different tax laws.
These are only a sample of the matters you may encounter doing business internationally. But, these aren't unusual requirements - all businesses need to follow these rules. If you make sure to do your research ahead of time, you can be prepared and avoid mistakes like Niantic’s.