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4 November 20221 minute read

Country-specific updates: US

Maryland’s Digital Advertising Tax on Large Corporations Struck Down

A Maryland County Circuit Court has invalidated a Maryland statute imposing a targeted tax on digital advertising revenue earned by large corporations. The judge concluded that the tax violated the Internet Tax Freedom Act, and the First Amendment and Commerce Clause of the United States Constitution. The tax, enacted in February of 2021 imposed a levy of between 2.5% and 10% on gross revenue from digital ads. The tax was challenged by Verizon and Comcast but was expected to impact a host of digital advertisers, including Google, Facebook (now Meta) and Amazon as well as other tech and communications companies.

Although no other states have adopted a digital advertising tax, a number of jurisdictions were considering similar taxes. The Maryland decision may cause these states to rethink future enactment. Maryland’s Attorney General has indicated that the State will appeal the decision.