Today service markets are becoming business reality as for example Amazon’s EC2 spot market. However, current research focusses on simplified consumer-provider service markets only. Taxes are an important market element which has not been considered yet for service markets. This paper introduces and evaluates the effects of tax systems for IaaS markets which trade virtual machines. As a digital good with well defined characteristics like storage or processing power a virtual machine can be taxed by the tax authority using different tax systems. Currently the value added tax is widely used for taxing virtual machines only. The main contribution of the paper is the so called CloudTax component, a framework to simulate and evaluate different tax systems on service markets. It allows to introduce economical principles and phenomenons like the Laffer Curve or tax incidences. The CloudTax component is based on the CloudSim simulation framework using the Bazaar-Extension for comprehensive economic simulations. We show that tax mechanisms strongly influence the efficiency of negotiation processes in the Cloud market.

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