VAT, GST, consumption tax, sales tax, use tax – no matter what term, or name, is used it is clear that the taxation of the digital economy is growing in popularity.
Here we outline the tax jurisdictions where such destination-based indirect tax rules are in place.
European Union Value-Added Tax (VAT) rate: 28 EU Member State VAT rates - taxation depends on location of the consumer In January 2015 new rules on the taxation of cross-border supplies of digital services to EU-based consumers came into force.
“It is unfair that overseas-based businesses selling services into Australia may not charge GST when local businesses have to charge GST. A local business that employs Australians pays rent in Australia, pays tax in Australia, and helps build our economy is disadvantaged by the current system. We will level the playing field for Australian businesses by mandating that foreign businesses supplying digital products and services are subject to the GST.
Digital disruption has laid waste to numerous traditional industries, from the ramifications of internet publishing on the print media to the effects of the Uber and AirBnB models on the car travel and lodging sectors.
An increasingly connected (and smartphone-obsessed) population expects this disruption. Today, consumption is all about the now economy. It is now easier than ever, thanks to infrastructural advances in broadband and WiFi, for consumers to access digital content from anywhere in the world.
Australia Digital GST liabilities are to become a reality for international digital service suppliers on the 1st of July.
On July 1, 2017, Australia’s Goods and Services Tax (GST) will – as outlined here new law — be extended to the cross-border supplies of digital services bought by Australian consumers. These supplies include digital services (e.g. the streaming, or downloading, of movies, music, apps, games, e-books) in addition to services such as architectural or legal services.
Australia’s new digital GST has moved a step closer as one of the last acts of Malcolm Turnbull’s government was the passing of the digital goods and services tax (GST) bill.
On Wednesday, May 4, the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016 finally passed both houses of the Australian Parliament. Four days later Turnbull’s government was dissolved and an election called for July 2.
Australia could recoup as much as AU$3.2 billion from a new 10% digital services GST revealed in the 2015 budget.
Draft laws for the new Australian digital services GST were introduced to the Australian Parliament on February 10, 2016. Treasurer Scott Morrison told The Australian Parliament why he was introducing such rules:
It ensures Australian businesses selling digital products and services are not disadvantaged relative to overseas businesses that sell equivalent products in Australia.
There have been some major digital tax developments in the Asia-Pacific region this month. In early February 2016 Ernst & Young urged the Singapore Government to introduce a new tax on international digital service suppliers in the island city-state’s 2016 Budget. Photo: Pixabay
The Asia-Pacific region, in general, has been very active in the realm of digital taxation.
In October 2015 Japan amended their consumption tax laws. Now, all foreign businesses supplying digital services to Japanese consumers must collect and remit an 8% consumption tax to the Japanese tax authorities.