Tag Archives: eservices

Featured article: EU – small change, big impact

The start of 2015 will bring the biggest single change to the EU VAT regime that telecom operators, broadcasters and others that provide eservices have seen in decades.

The legislation is expected to have a profound impact on e-services providers, particularly on their pricing and commercial strategy. As providers of these services take steps to adapt to the new legislation, the result will be either a sharp increase in the prices charged to many consumers or a cut in suppliers’ profit margins – neither of which is a desirable outcome.

In practice, companies based in the EU will be affected the most, as the rules change mostly for those suppliers. The changes will also affect non-EU suppliers. The legislation is expected to have a profound impact on eservices providers, particularly on their pricing and commercial strategy

Stephen Dale, Martin Blanche and Johnathan Davies provide an overview on the changes the new EU VAT rules will bring to telecom operators, broadcasters and other providers of eservices from 1 January 2015. Their article “EU: small change, big impact” (originally published in Tax planning international – Indirect taxes: Volume 11, Number 10, October 2013) focuses on possible outcomes for eservice providers.

EU: Practical guidelines for businesses on new VAT rules for telecommunications, broadcasting and eservices

The EU Commission has published practical guidelines on the mini-one-stop-shop to prepare businesses for the new B2C VAT rules for telecoms, broadcasting and eservices, which will enter into force with 1 January 2015.

The aim is to help businesses to be fully prepared on time for the change-over, whereby VAT will be charged in the country where the customer is based.VAT will have to be collected by all providers of telecom, broadcasting and eservices, regardless whether they are established inside or outside of the EU. Find out more

South Africa: Update on taxation of eservices

Further to our previous blog post, the South African Revenue Service (“SARS”) is planning to implement new VAT legislation which targets eservices provided by foreign (non-established) businesses to customers located in South Africa.

We have mentioned that at the end of August PwC South Africa was going to have a meeting with SARS and the National Treasury on this topic, in respect of which we are now pleased to provide you with an update. All parties agreed at the meeting that there are a number of issues that need to be addressed in respect of the proposed amendments. Nevertheless, there was consensus that the amendments need to proceed as a matter of priority, to ensure that there is no loss of tax revenue on these types of supplies, particularly as this is an area where trade is growing.

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South Africa: Further news about the planned VAT taxation of eservices (B2B and B2C)

As reported there is new draft VAT legislation in South Africa, which is planned to be implemented in early 2014, which targets electronically supplied services provided by foreign (non-established) business to customers located in South Africa.

Whilst most of us are familiar with the rules and administrative practices which operate within the EU and Switzerland/Norway regarding the supply of such services by non-established businesses to private customers (B2C), it is important to recognize that South African VAT legislation does not currently distinguish as between B2B supplies and B2C supplies and refers generically to “imported services”. Thus whilst the intended “target” may well be the B2C sector it appears that the B2B sector may be equally impacted due to the absence of the distinction referred to above.

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Next meeting of PwC’s B2C 2015 working Group: 5 September 2013

Date: Thursday, 5 September 2013

Timing: 9.30 – 16.30 CET

Location: Brussels (address)

With the 2015 VAT Implementing Regulation now being adopted, which rounded the EU legislative framework, businesses that will be affected by the changes in legislation should now have a clearer picture of their 2015 footprint and the critical issues they need to address in the run-up to 2015.

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US webcast in relation to the evolving VAT landscape for EU established sellers of e-services

As an update to our previous webcasts on the 2015 EU VAT changes to electronically supplied services, we are pleased to inform you that we organize a follow-up webcast on August 22, 2013 at 12:00PM (EDT) to address the agreement reached by the EU Ecofin Council on June 21, 2013.

The council agreed upon the VAT Implementing Regulation addressing the new treatment for sales of electronically supplied services (e-services) by EU established sellers to EU private individuals effective January 1, 2015. The new rules will require an EU established seller to account for VAT for such sales at the rates where the EU private individuals are located rather than the EU established seller’s location as, historically, it has been done. The list of services considered e-services is broad and includes mobile applications, downloadable or cloud accessible games and music, and online subscription services.

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South Africa: VAT registration of foreign ecommerce service suppliers as of 1 January 2014

As of 1 January 2o14 all non-South African suppliers of ecommerce services will be required to register as VAT vendors in South Africa and account for output VAT on its supplies to South African residents.

E-commerce services are defined in the South African VAT Act to include any supply of services where the placing of the order and delivery of the service is made electronically.

The VAT registration requirement for a non-resident supplier of ecommerce services is triggered by either the supply of such services to a South African resident recipients (either B2B or B2C) or where payment is affected from a South African registered bank.

The level of supplies made by the non-resident in South Africa is irrelevant, meaning that there is no minimal turnover threshold and the obligation to VAT register arises from the very first South African Rand generated with e-service to SA based clients.

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EU: B2C 2015 VAT Changes – Implementing Regulation adopted in Ecofin last Friday

We are happy to announce that the EU Ecofin Council reached political agreement on the proposal for VAT implementing Regulation on B2C 2015 place of supply issues, in a meeting in Luxembourg last Friday 21 June.

It will apply as from 1 January 2015. It will be officially released in the next weeks after clean up and translation to the EU official languages.

Important to note is that this Implementing Regulation has direct effect and does not need to be implemented/transposed by the EU Member States in their national VAT legislation (primary, secondary or administrative guidance).

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