New Zealand – Update on proposed new GST implications for foreign B2C e-service providers as of 1 October 2016

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In accordance with our posts (here and here) on the new GST rules proposed to be effective form 1 October 2016 we would like to update you that PwC New Zealand has recently been advised by New Zealand Inland Revenue Policy that the standard legislative process will not be followed and the passage of the law will be accelerated.

As next step it is expected that the proposed draft legislation will be passed by the New Zealand Parliament under urgency in April 2016. We do not expect major changes to the draft law so businesses can already start / continue with their preparation for the new rules now. For convenience, please see below updated timeline until the go live date of 1 October 2016. Find out more

Denmark – government enabled to request payment information from payment solutions providers

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The Danish Government has widen the Tax Authorities’ information collection powers, by enabling it to be able to request payment information in connection with foreign suppliers who supply goods via distance selling, on-line e-commerce or supply electronic services to private individuals in Denmark. The law was accepted by parliament the 21 December 2015 and is in force as of 1 January 2016.

The intention behind the law is to protect the Danish VAT revenue and to ensure that Danish companies are able to compete on pricing with their foreign counterparts and to minimise VAT leakage.

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Russia – draft legislation on VAT on B2C supply of electronic services

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Russia can be the next in line to join the countries that impose VAT on the B2C supply of electronic services by non-established service providers. A draft legislation that would require foreign companies to start charging VAT on internet / digital services provided to individuals is currently being considered by the Russian State Duma.

According to the draft law, digital services provided by foreign companies to Russian individuals should be regarded as subject to Russian VAT even if currently such companies are not tax registered in Russia.

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New Zealand – Tax Bill proposes GST registration for foreign B2C e-service providers as of 1 October 2016

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Further to our previous post the New Zealand Government submitted its legislative proposal in relation to the GST law reform on offshore online purchases of services.

The Government has followed the modern VAT/GST practices and OECD recommendations and has decided to reform the GST system. The reforms focus on two main areas:

  1. Digital products and cross border services, in respect of which draft legislation proposes imposing GST on digital products and other services purchased by New Zealand private consumers from offshore sellers. The new rules will apply from 1 October 2016.
  2. Low value imported goods, where a consultation paper is being worked on regarding the options to impose of GST and duties on low value imported goods. PwC New Zealand expects the document to be released in April 2016.

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EU – ECJ ruled Bitcoin exchange services to be VAT exempt

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The Court of Justice of the European Union delivered its judgment earlier today in the long-awaited case on whether Bitcoin exchange services are considered to be VAT exempt services. The Court followed the earlier opinion of the Advocate General and confirmed that the exchange of Bitcoins into conventional currencies and vice versa in return for a exchange commission falls within the VAT exemption for transactions concerning currency, bank notes and coins used as legal tender provided by the European VAT Directive.

This judgment was made on the grounds that Bitcoin (as a virtual) currency has no other purpose than to be a means of payment and that it is accepted for that purpose by certain operations.

You can access the judgement here.

OECD – BEPS project – Final report on Action 1: Addressing the Tax Challenges of the Digital Economy

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The OECD’s Base Erosion and Profit Shifting (BEPS) project started in 2013 amid growing concern of tax planning used by multinational enterprises (MNEs) to artificially reduce taxable income / shift profits to low tax countries by benefitting from discrepancies between country specific tax rules.

OECD members and G20 countries defined an Action Plan of 15 items to address the key taxation challenges of today’s global economy. After two years of intensive work and consultation with different stakeholders all actions are now completed.

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Data analytics – PwC Switzerland’s position paper “Business Booster: Data Analytics”

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Data and big data have been a hot topic for a while. The increased spread of the Internet in the past decades generated a wealth of data, which can be of tremendous value and it is essentially a new asset class for businesses, if utilized properly.

Data-savvy businesses are using data analytics to increase the speed and quality of their decision making process.

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EU – Review of the content and format of the EU Commission’s Mini One Stop Shop (MOSS) web Portal – Have your say

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As part of the current efforts to support the smooth implementation of the 2015 Place of Supply rules (Council Directive 2008/8/EC) and the functioning of the MOSS portal, the Commission is looking for inputs and suggestions to improve the quality of the information presented on the MOSS web Portal.

The quote is from the EU Commission’s survey site where you can submit your comments by Friday, 30 October 2015.  The participation in the survey should not take longer than 15 minutes.

Australia – GST treatment of cross-border transactions – GST changes to B2C and B2B supplies – new exposure draft released

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Treasury has released a second exposure draft (ED) legislation on the Government’s integrity measures to extend the GST to imported digital products and other services. The ED also seeks comments on provisions to give effect to the announced measure relating to GST cross-border business to business transactions and the ‘connected with Australia’ rules.

Treasury has noted that as a result of feedback from consultation (including feedback from a number of international suppliers that have had experience in dealing with similar provisions in other jurisdictions), changes have been made to the content of the earlier exposure draft. This is especially in relation to the Australian Consumer test and also the operation of the intermediary provisions.
There is still an opportunity to make submissions on these measures and given that Treasury has appeared to take onboard a lot of the feedback obtained, impacted taxpayers should use this opportunity to make any further comments on the ED to Treasury by Wednesday 21 October 2015.

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US – The disparate state and local tax treatment of digital streaming services

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In recent months, multiple jurisdictions have issued guidance regarding the taxability of digital streaming services. These developments signify a growing trend by states to address whether and how such products and services should be taxed. Similar to other trending areas, such as Software as a Service (SaaS), states and cities must initially determine how to classify digital streaming based on existing state and local tax rules. As the following recent developments illustrate, companies offering digital streaming services, as well as consumers of such services, should be aware of the potential for divergent tax determinations across the different states. Find out more