The Digital Economy is changing the landscape of international taxation and countries around the world are trying keep up with the new challenges. An increasing number of countries are taxing VAT or GST on digital services supplied from abroad to consumers. Global VAT Compliance us up-to-date with all these new regulation and provides VAT/GST solutions to several Digital Companies.
VAT & GST on Digital Services
An increasing number of countries are taxing VAT or GST on electronic services supplied from abroad to consumers. As of 2015 the EU applied the Mini One Stop Shop which enables trader to register in one country and report and remit VAT for the entire EU. Global VAT Compliance files EU VAT MOSS returns in various jurisdictions throughout the EU. Also, countries outside the EU have implemented a mechanism to charge VAT, GST or similar transaction taxes on supplies made from other countries to private individuals.
Video Media Streaming
The global video streaming market reached a value of EUR 33.25 billion in 2018 and it seems it will grow even more, with an expected value of EUR 113 billion by 2025 1. The adoption of cloud-based streaming services such as Netflix, Amazon Video Prime and YouTube are likely to increase in the near future thanks to the convenience of watching videos on handheld devices such as smartphones and tablets. What’s more, with the upcoming streaming services by Disney 2 and Apple 3 this growing industry is expected to boost even more.
Music Media Streaming
More people are streaming music through services like Apple Music and Spotify, and the record industry is seeing a major lift. Revenue made from streaming services is projected to be EUR 10.082m worldwide in 2019, which represents approximately 80% of the music industry’s overall revenue. In addition, EUR 11.843m of revenue are expected by 2023 that represents an annual growth rate of 4.1%. 12.
Software
With the advent of the Internet and cloud computing, the computer software industry has radically changed how companies interact with, develop and use software. Software was once a product that was purchased, installed and maintained. In 2016, more and more companies are using software in a subscription model where all the development, maintenance and upkeep of the program is done by the original creator 1.
Video Games
Today’s video games industry is in the throes of a huge transformation from a product-oriented business to an as-a-service model. At the same time, new technologies like 5G, cloud, and virtual reality (VR) will usher in a new phase of innovation, while new business models like support for in-game micropayments are already changing the economics of gaming. In 2018, the video games market was worth more than $130bn and is likely to become a $300bn-plus industry by 2025. Over the coming years, with the increased maturity of streaming, cloud services, and mobile esports, combined with the fact that mobile platforms are close to technical parity with their PC and console rivals, more gamers will shift towards mobile gaming platforms, driving the expansion of this market to over $100bn by 2022, up from $55bn in 2018 1.
DIGITAL SERVICE TAX NEWS
GLOBAL VAT TABLE DIGITAL SERVICES
Below you will find the VAT rates and thresholds for foreign providers of digital services in different countries.
Global VAT Compliance can help you comply with all these jurisdictions.
We update this regularly but please check with us to ensure this is correct at the date you are using it.
| Country | Standard VAT/GST rate | Levy eServices from | Type of VAT registration | Threshold |
| Albania | 20% | January 1, 2015 | Standard VAT registration and fiscal representative | None |
| Argentina | 21% | February 1, 2018 | The Argentine approach to assigning liability for the collection and remittance of VAT in this new rule is interesting. The place of supply rules are in place but the liability is not on the non-resident supplier. The liability for the collection and remittance of VAT, in practice, falls on the Argentinian customer’s payment provider. | None |
| Australia | 10% | July 1, 2017 | GST on eServices | AU$ 75,000 |
| Bahrain | 5% | January 1, 2019 | VAT on eServices | None |
| Bangladesh | 15% | July 1, 2018 | VAT on eServices | None |
| Belarus | 20% | January 1, 2018 | VAT on eServices | None |
| Colombia | 19% | July 1, 2018 | VAT on eServices | |
| Costa Rica | 13% | July1, 2019 | VAT on digital services | |
| Egypt | 14% | September 8, 2016 | VAT on eServices | |
| European Union | Various | July 1, 2003 | MOSS | |
| Ghana | 15% | January 1, 2016 | VAT on digital services | GHS 120,000 |
| Iceland | 24% | November 1, 2011 | Standard VAT registration | 1 million ISK |
| India | 18% | July 1, 2017 | GST on OIDAR Servoces | None |
| Japan | 8% | October 1, 2015 | Standard VAT registration (B2B & B2C) | JPY 10 million |
| Malaysia | 6% | January 1, 2020 | Service Tax on Imported Digital Services | None |
| Morocco | 20% | January 1, 2017 | VAT on eServices | None |
| New Zealand | 15% | October 1, 2016 | GST on eServices | NZ$ 60,000 |
| Norway | 25% | July 1, 2011 | VAT on eServices | NOK 50,000 |
| Québec, Canada | 9,975% | January 1, 2019 | Québec Sales Tax (QST) on eServices | |
| Russia | 20% | January 1, 2017 | VAT on eServices. From January 1, 2019, Business-to-Business (B2B) supplies of digital services from foreign-based businesses to Russian businesses will be subject to VAT. | None |
| Saudi Arabia | 5% | January 1, 2018 | Standard VAT registration | None |
| Serbia | 20% | April 1, 2017 | VAT on eServices | None |
| South Africa | 14% | July 1, 2014 | VAT on eServices (B2B & B2C) | 50.000 ZAR |
| South Korea | 10% | July 1, 2015 | Standard VAT registration | None |
| Singapore | 7% | January 1, 2020 | GST registration via Overseas Vendor Registration (OVR) | -1. Have an annual global turnover exceeding SGD$100,00; and – 2. Make B2C supplies of digital services in Singapore exceeding SGD$100,000. |
| Switzerland | 8% | January 1, 2010 | VAT on eServices | CHF 100,000 |
| Taiwan | 5% | July 1, 2017 | Business Tax | NTD 480,000 |
| Thailand | 10% | January 1, 2020 (potential date) | VAT on eServices | None |
| Turkey | 18% | January 1, 2018 | VAT on eServices | None |
| United Arab Emirates (UAE) | 5% | January 1, 2018 | Standard VAT registration | None |
| Uruguay | 22% | July 1, 2018 | VAT on eServices | None |
| Vietnam | 10% | July 1, 2020 | The obligation to collect the VAT will fall on banks and/or payment providers, including credit card issuers. It will be their responsibility to identify payments by consumers to foreign online sellers, and deduct withholding VAT. | None |
for DIGITAL SERVICES
Suppliers of Digital Services with a VAT MOSS registration
UK business will need to register under the non-EU VAT MOSS scheme in an E27 member state
EU business will need to VAT register in the UK for to report VAT on digital services in the UK
Non-EU business with UK VAT MOSS registration and any other EU establishment will need to moved their VAT MOSS to an E27
Non-EU business with only UK establishment will need to register under the non-EU VAT MOSS scheme in an E27 member state
VAT for eCommerce
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