With an update rolling out to the Xbox 360, Microsoft will finally transition from MS points to local currently. Microsoft has posted a FAQ explaining the transition in further detail: FAQ
Your current Microsoft Points can be converted to an equivalent dollar value (valid until June 1, 2015). Transactions at this time are not being taxed, but in a future update Microsoft will start charging for local sales tax. However, the company will charge local sales tax on transactions in the future. Xbox Live users can continue to buy and redeem Microsoft Points cards for the foreseeable future, and later this year, Microsoft will start offering Xbox Gift Cards to replace the old cards.
A Microsoft representative told Polygon,
“Today we started rolling out the official release of the 2013 Xbox Live Update. To ensure a stable release, this will be a gradual deployment across members and regions. Don’t panic if you don’t see an immediate update, just keep checking back in.” The rep added that the update will be available in all 41 Xbox Live-enabled markets.