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

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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

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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

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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

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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

Israel – Tax Authorities issue Draft Circular regarding activities of foreign companies through the Internet

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The Israeli Tax Authorities (ITA) issued draft guidelines titled “Activities of Foreign Companies through the Internet” (hereafter the “Draft Circular”) for comments.

The purpose of the Draft Circular is twofold:

  1. To elaborate on when service income is generated by a foreign entity; in cases where the internet serves as a key tool for generating such service income, income would be regarded as generated by a permanent establishment (PE) of such an entity in Israel.
  2. To determine, if, and under what circumstances, a foreign entity, which provides services to Israeli customers through the internet, should register for Israeli VAT purposes.

Find out more

Australia – Budget announcement confirms GST obligation of non-established digital service providers

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As anticipated in our recent post tonight’s Budget announced new law in relation to the GST treatment of digital products and other services imported by Australian consumers, based on the OECD guidelines for the taxation of cross-border intangibles. The new law will apply to supplies made on or after 1 July 2017. The closing date for the submission of comments on the draft legislation is 7 July 2015, which does not give affected taxpayers long to consult on the process.

Find out more

South Korea – VAT on electronic services provided by foreign entities – changes as of 1 July 2015

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Korea joins the group of countries which require non-established companies to register and account for on their B2C sales of electronic service into South Korea.

The VAT law has recently been amended to apply VAT to the supplies of electronic services (e.g. applications, games, music, films, electronic documents, software, etc.) purchased from non-resident service providers (i.e. offshore app developers or through offshore open markets app stores).

Find out more