Australia, as well as many other jurisdictions including New Zealand and Switzerland, are implementing new rules regarding the application of the goods and services tax (GST) or value added tax (VAT) to the supply of low value goods to consumers.
Changes are expected from April 2019 concerning the taxation of electronic services in South Africa. All non-resident suppliers of e-services (if not specifically excluded from the revised regulations) will have a potential VAT registration liability in South Africa if the total value of their supplies exceeds R1 million (approx. 70’000 USD) in any twelve-month period.
For further details, please see the tax alert from PwC South Africa:
A significant GST matter reflecting brave new policy globally
The NZ Government announced last week that it is seeking consultation on the best way to collect GST on online purchases, by private NZ consumers, of imported low value goods (LVGs) under NZ$400 (approx. USD 280). If enacted, the new rules will apply from 1 October 2019.
This is a significant issue which has been discussed by the OECD, governments and regulators around the world. If enacted as currently proposed, the new LVG rules will be broadly consistent with the introduction of NZ’s remote services rules (implemented in October 2016).
Following years of changes in the indirect tax area, now also from direct tax side comes an EU proposal that will bring significant changes in the taxation of online businesses. Both the draft directive concerning long-term solution and the interim solution could bring radical changes for companies with a “significant digital presence”.
Please see PwC Newsletter for further detail
The NZ remote services (RS) rules have been in force since 1 October 2016 and are regarded as a remarkable success by NZ Inland Revenue. Over 150 offshore sellers have registered and more than NZ$125 million of annual GST has been generated – the GST collected is more than 4 times the original estimates. NZ Inland Revenue deserves credit for the informative education campaign on the RS rules and efficient service when the rules first came in.
The Swiss VAT law was recently changed. From 1 January 2018 onwards, any person or business with global turnover of CHF 100’000 or more may be liable to VAT starting from the first Swiss franc of turnover in Switzerland. This means that if you want to continue doing business in Switzerland, you need to register with the tax authority.
If you are looking for a solution that allows you to continue doing business in Switzerland without breaking the bank, PwC’s Smart VAT may be the right option for you. PwC’s Smart VAT is an online platform that allows you to do the following:
- Register for Swiss VAT and obtain a Swiss VAT number
- Appoint PwC as your fiscal representative to deal with the tax authority.
- Register for filing the quarterly Swiss VAT returns by electronic means
- Prepare quarterly VAT returns for electronic filing
- Access letters and queries from the tax authority and provide your replies
The European Parliament has backed, by 590 votes to 8 with 10 abstentions, the EU Commission’s proposal to bring the VAT treatment of electronic publications into line with those publications to which the Member States can apply a reduced rate. The proposal now requires unanimous approval by the EU Council.
You can find further Information on the vote in the attached proposal (see below link) and on the European Parliament’s Website.
1 July 2017, supplies of things other than goods or real property made to an ‘Australian consumer’ will be connected with Australia and subject to GST. The Australian provisions are broader than some other jurisdictions and essentially anything other than goods or real property are caught, and if an entity’s GST turnover exceeds the registration turnover threshold of AUD 75,000, it would be required to register for GST in Australia. Non-resident suppliers will be able to access a limited and simplified GST registration, although they can also register under the full registration procedure.
Where supplies of inbound intangibles are made through an Electronic Distribution Platform (EDP), the GST liability on these supplies would shift to the operator of the EDP (i.e. generally, online marketplaces that act as intermediaries). The Australian Taxation Office (ATO) has released a draft Law Companion Guideline (LCG 2017/D4) dealing with the EDP provisions.
In addition, under proposals still before Parliament (the Treasury Laws Amendment (Goods and Services Tax (GST) Low Value Goods) Bill 2017), low-value goods (AUD 1,000 and under) supplied by overseas retailers to Australian consumers would become taxable supplies beginning 1 July 2017. The Bill was referred to the Senate Economics Legislation Committee which recommended that the implementation of the measures be delayed to 1 July 2018. The Bill is listed to be debated in Parliament in June 2017.
Please see the attached newsletter for further details.
On 9 November 2016, India`s Central Board of Excise and Customs (CBEC) announced the new arrival of the service tax on cross-border business-to-consumer (B2C) services via cross-border e-commerce transaction.
The new digital tax regime came into effect on 1 December 2016, whilst foreign companies are yet to be effected by the service tax rules for digital content, their Indian counterparts have incurred a 15% charge.
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