Origin-based and destination-based sales tax collection are two methods used to determine which tax rate applies to a transaction.

• Origin-Based Sales Tax: The tax rate is determined by the seller’s location, regardless of where the buyer is located. This means that sales tax is applied based on the tax rate in the city or county where the seller operates.

• Destination-Based Sales Tax: The tax rate is determined by the buyer’s location, where the goods are delivered or the service is provided. This approach ensures that the tax benefits the community where consumption occurs.

Arizona uses a destination-based sales tax system to align tax revenue with where the benefits of public services are received. This method ensures fairness by taxing consumers based on their location, supporting local infrastructure and services where goods and services are consumed. It also simplifies compliance for multi-jurisdictional sellers by focusing on the buyer’s address rather than the seller’s. Destination-based tax systems typically reflect the economic presence of buyers, promoting equitable revenue distribution among municipalities and enhancing public service funding where it’s most needed.