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.
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.
Fittingly, on the 30th anniversary of its goods and services tax (GST) system introduction, New Zealand continues its taxation evolution by extending GST to remote digital service supplies. Taxamo, of course, will support this extension when introduced on October 1, 2016.
In October 1986, when New Zealand introduced GST, there was no digital economy. Now, 30 years on, New Zealand will become one of the first tax jurisdictions to implement a ground-breaking Organisation for Economic Co-operation and Development (OECD) recommendation on how to tax the digital economy.
On October 1 New Zealand will become the latest country to seek to tax the burgeoning global digital economy by extending the scope of their indirect taxation system.
From this date forward, international companies supplying digital services (e.g. the download of music and images, online gaming subscriptions, and streaming services) to New Zealand-based consumers will have to add, collect, and remit a goods and services tax (GST) at the rate of 15%.
In 100 days time New Zealand will become the latest global tax jurisdiction to harness the power of the rapidly-expanding digital economy. On October 1, 2016, a goods and services tax (GST) at a rate of 15% will be added to the supply of online services (such as software and music downloads) to New Zealand residents from an offshore supplier. Image: Pixabay.com
On October 1, 2016, the New Zealand Taxation (Residential Land Withholding Tax, GST on Online Services and Student Loans) Act 2015 becomes law.
New Zealand GST on digital services supplied from abroad to New Zealand-based consumers will come into effect on October 1, 2016.
Details of the proposed new digital GST – due to come into effect on October 1, 2016 – passed a third reading in the New Zealand parliament on May 10. The hurdling of this latest legislative barrier now leaves the path clear for the new rules concerning the supply of digital services by foreign companies to New Zealand consumers to be introduced at the start of Q4 2016.