South Korea – proposed change to the scope of the supply of electronic services – B2B supplies may be excluded

PwC-NYC-Technology-53_noexp.html

We reported in our initial post on the South Korean VAT rule changes regarding the supply of electronic services by non-established service providers (effective from 1 July 2015), that the legislation subjected both B2B and B2C supplies to VAT under the new rules. There has been controversy whether the legislation really intended to apply the same treatment to B2B supplies, as to B2C.

The recently submitted Korean tax reform proposal for 2015 brings clarity in this regard by inserting a provision that B2B supplies of electronic services (as defined) will not be subject to the new VAT rules and they remain taxable by Korean business customers under the reverse charge mechanism.

For further details on the above and other proposed tax changes please refer to PwC Korea’s newsletter. Alternatively, please contact Changho Jo of PwC Korea or me.

Australia – changes to the GST rules for online sales of goods

Photo_RGB_R_CAN_VC_D1_CM1_1797-exp.-06-11-2018.html

The Australian Federal Treasurer announced yesterday that it will be discussing GST measures with State Treasurers today with a view to announcing changes to the Australian GST rules for online sales of goods into Australia. You may be aware that currently goods sold into Australia under A$1,000 (approx. USD 730) are not subject to GST or duty.

At this stage, we do not have any details of the precise changes, but on the basis of statements made by the Treasurer, it is assumed that the measures are likely to involve a requirement for a non-resident seller to register and account for GST on the sales of all goods into Australia. Such a change may not impact on the current import rules, potentially meaning that goods imported into Australia below the current A$1,000 low value threshold could continue to remain free of customs duties. Find out more

New Zealand – Taxing by the megabyte – proposed changes to the GST treatment of the digital economy

Photo_RGB_R_IST_D5_9060-exp.02-11-2018.html

As widely anticipated, the Government of New Zealand has released a discussion document on the GST treatment of digital products and other services purchased online by New Zealand consumers. The analysis in the discussion document is based on the OECD guidelines for applying GST to cross-border services and intangibles (e.g. music, movie, and game downloads).

In relation to imported goods, the Government has indicated that various challenges exist to devising a solution for low value goods imports (covered by the current so-called $400 threshold or the minimum duties / taxes $60 concession). Although the goods solution is expected to take more time, work is progressing on a solution for collecting duty / GST on imported goods in the most efficient way.

According to PwC New Zealand the discussion document demonstrates that the Government and policy makers have a desire to keep the GST model current for the digital economy. This is in line with recent OECD guidelines and developments in Australia, Europe, Japan, South Korea, and South Africa. The document also addresses matters of sound tax policy, tax leakage (estimated at $180 million per annum and growing) and fairness. The measures will go a long way to ensuring that consumption in New Zealand is taxed in the same way as domestic purchases of goods and Services.

Find out more

EU – Advocate General Opinion – Bitcoin dealing VAT-free as currency exchange?

PwC-NYC-Technology-37_noexp.html

ECJ Advocate General Kokott has recommended the Court to consider dealing in bitcoins for a commission to be a service exempt from VAT under the currency dealing provision (link – to the German version of the opinion. In English it is not yet available) .

A Swedish dealer in bitcoins (buying and selling bitcoins in exchange for Swedish kroner) was in dispute with the tax office over the VAT liability on the currency exchange. He maintained that he was providing a VAT exempt service of currency exchange, whereas the tax office disputed the point because bitcoins are not legal tender. It was also pointed out that bitcoins are not subject to any form of government supervision or control and offer no guarantee of continued usefulness to the holder. Find out more

Japan – Tax authorities’ guidelines for the new JCT rules as of 1 October 2015 are now available in English

PwC-NYC-Technology-42_noexp.html

Further to our previous posts on this topic (here, here and here) the Japanese National Tax Agency (NTA) published on-line its guide in English on the Japanese Consumption Tax (JCT) obligations on the cross-border supply of electronic services.

You can access the English version of the document intended for foreign businesses here. The NTA also published some further documents here on this topic, however please note that all these documents “are used only for explanations”.

For further information please contact Kotaku Kimu of PwC Japan or me.

South Korea – simplified registration website for B2C e-service providers is expected to be available from 10 July

PwC_R_NYC_Technology_78_Noexp.html

As previously reported here and here the amended South Korean VAT law for the supply of e-services from overseas has been effective since 1 July 2015. Accordingly, overseas service providers shall apply for the simplified business registration by 20 July 2015.

The Korean National Tax Service (“NTS”) recently issued a notification indicating that the website for the application of simplified business registration is still under construction. The website is expected to go-live on 10 July 2015. If a taxpayer would like to apply for the registration earlier than that, it is possible to complete a registration form and submit it via email to the NTS.

For further information please contact Changho Jo of PwC Korea or me.

Japan – Update on practical implications of the new JCT rules effective from 1 October 2015

PwC-NYC-Technology-54_noexp.html

Further to our previous posts on the Japanese Consumption Tax changes (here, here, here and here), at a recent explanatory session by the Japanese National Tax Agency (NTA) on 9 June 2015 the NTA advised that the special indication “the supplier is liable to account for consumption tax” on B2C invoices can be replaced by implying that the sale price is inclusive of consumption tax. E.g. “JPY 108,000 yen (including 8% consumption tax of JPY 8,000)”. In addition the registration number of a Registered Offshore Business Person is still required to be included in the invoice.

However, given the new Consumption Tax Law which still clearly stipulates that input tax credit on a taxable purchase of B2C Telecommunication Online Services on or after 1 October 2015 is only possible if the supplier is a “Registered Offshore Business Person” and the invoice or purchase receipt (which can be prepared electronically) includes the registration number of the supplier and the special indication that the supplier is liable to account for consumption tax. If there is no such indication on the B2C invoice, a business customer should ask for re-issuing the proper invoice pursuant to the new Consumption Tax Law to ensure the deductibility of input consumption tax.

For reference please also see PwC Japan’s newsletter of 12 June 2015 on “New Japanese consumption tax rules on cross-border digital services”.

For further information please contact Kotaku Kimu of PwC Japan or me.

PwC Webcast – BEPS and VAT – 18 June 2015

Photo_RGB_R_DUB_5769-exp.-07-10-2018.html

Since the OECD’s Action Plan on Base Erosion and Profit Shifting (BEPS) was published in July 2013 with a view to addressing perceived flaws in international tax rules, the work under the Action Plan, backed by the G20 finance ministers, has progressed swifter than expected by many and has resulted in over 10 draft papers being published to date.

So what does BEPS mean for Indirect Taxes?

Whilst only two of the papers published so far contain specific references to Indirect Taxation and VAT, the potential impact of the changes considered in the other BEPS papers will also lead to changes which could indirectly have significant implications for international VAT and customs duties specialists to be aware of going forward. In our webinar, PwC Indirect Tax specialists are going to take a closer look at what the impact of the proposals could be and what to look out for.

Joining instructions:

Date:     June 18, 2015
Time:    16pm CET, 10am Eastern(New York)

Click on the link to open the webcast registration page.  You may log in starting 15 minutes before the webcast begins, but it will be also recorded for later viewing.

After filling out the registration page, the webcast will open in Internet Explorer to enable you to view the presentation on your desktop and hear audio through your computer’s speakers.

EU Commission – revamped Taxation and Customs website

PwC-NYC-Technology-43_noexp.html

The EU Commission recently updated its Taxation and Customs Union website, which now offers a way better overview. At first sight it also seems that you need to spend less time on researching the website for what you are looking for and it provides easier access to information. You can check the VAT section here, including a good repository of all documents relating to the B2C 2015 changes.

Japan – Announcement of definition of B2B / B2C Telecommunication Online Services

Photo_RGB_R_CAN_TR_D1_CM1_6401-exp.05-21-2018-.html

Further to our previous posts on this topic (here, here and here), the Japanese tax authorities recently issued a new Consumption Tax Law Basic Circular (Circular  – in Japanese) as well as further guidance on electronically supplied services to provide further clarity on the Japanese Consumption Tax (JCT) impact of the new rules on an Offshore Business Person. In particular the leaflet further explains what is considered to be “B2C Telecommunication Online Services” (Links in Japanese for the leaflet for business customers and off-shore suppliers and to general Q&A).

Find out more