Standardizing international digital tax compliance

Wed Nov 25, 2015

Addressing legislative and technical pain points for digital merchants.

While merchants struggle to comply with varying and conflicting digital tax laws from around the world, a new white paper released by Taxamo outlines a number of recommendations for tax authorities that if adopted, would greatly ease the burden of compliance for digital merchants.

Taking recent tax changes implemented in Europe, Japan, and South Africa as case examples, the white paper, ‘Standardizing International Digital Tax Compliance’ provides detailed background and guidance on:

  • Practical complexities created by new digital tax laws
  • Challenges for lawmakers legislating in this area
  • Technical challenges facing digital merchants who need to comply with conflicting requirements across multiple regions
  • Five tech recommendations for tax authorities covering registration, tax calculation, filing and storage

Commenting on the release, Taxamo CEO John McCarthy said: “With this white paper, we are laying out a common-sense, evidence-based approach that legislators can draw upon when drafting specific rules around taxing the digital economy.”

Global trend

On October 1, 2015, Japan became the 36th country to introduce new ‘place of supply’ tax rules. Similar EU VAT rules have been in place since January 2015 with several other regions, such as New Zealand and Australia, announcing plans for digital tax laws to be introduced in October 1, 2016, and July 2017 respectively. These new regulations, in addition to the recent adoption by the OECD of guidelines recommending that countries take a “place of consumption” based approach to the taxation of digital goods and services, mean increased compliance burdens on digital merchants worldwide. These burdens are increased as tax jurisdictions take a unilateral approach without thought to the international context of digital taxation, and the practical impact businesses have in implementing conflicting logic on a single platform.

Click here to download the white paper.

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

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