New digital tax rules will fail without better communication

Thu Aug 13, 2015

White paper proposes a more practical approach to communicating with digital merchants.

A lack of transparency and poor communication in the introduction of new digital tax rules in Europe resulted in a lack of awareness and significant resistance from small-to-medium (SME) sized online merchants. Although these digital tax changes had been agreed since 2008, many merchants were left in the dark as the January 1 deadline approached.

In an effort to avoid this situation in other tax jurisdictions, digital tax experts Taxamo have released a White Paper written exclusively for tax authorities that have, or soon plan to implement taxation based on the place of consumption of digital services.

The White Paper: ‘Taxing Digital Services: A practical approach to communicating digital tax rules with global digital service merchants’ draws on Taxamo’s experience with the introduction of the new rules in Europe and delivers insights into best practice on communicating tax rule changes to international digital merchants.

“Very often the problem facing countries is that there is no established way of communicating requirements to merchants who are not established in that country,” said Taxamo CEO John McCarthy, “We witnessed this first-hand in Europe and now, more than 6 months on, our aim is to share what we’ve learned so that tax authorities can effectively communicate with digital merchants beyond their borders.”

Countries that have already announced plans to introduce similar digital taxation laws include South Africa, Norway, Switzerland (introducing new threshold rules), Korea, Japan (new consumption tax in October 2015), and Iceland. Australia also plans to introduce digital sales tax rules in early 2017, while New Zealand continues to investigate the potential introduction of similar regulations.

As the leading technical solution for compliance with EU VAT changes 2015, Taxamo presents key trends from its own digital service merchant database from Q1 2015 and makes recommendations on the strongest channels and approaches for tax authorities to communicate with eService merchants to ensure effective rollout and uptake of new digital tax laws.

Note: Taxamo content is created for guidance only, please consult your local tax advisor for professional advice.

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