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

France approved Digital Service Tax

The Digital Service Tax (DST) was approved by the French Senate on 11 July 2019 (1), which will tax big technological companies. As previously mention in one of our posts the tax is aimed to large corporations in the digital sector whose taxable...

VAT rates for eBooks so far (2019)

Since the European Council agreed to allow member states to apply a reduced VAT rate to electronic publications in October 2018 (1), VAT rates for eBooks have changed fast in EU countries. 2019 has witnessed several VAT rate updates for...

France to introduce a Digital Service Tax

On May 21, 2019, the French senate presented a law project for the creation of a tax on Digital Services(1). Find below the main points of the law project. Taxable companies The tax is aim to large companies in the digital sector whose taxable...

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