On May 23, 2013, Minnesota Governor Mark Dayton signed H.F 677, which makes significant changes to Minnesota’s sales and use tax, including taxing digital goods, adding click-through nexus provisions, authorizing multiple points of use exemption certificates, and requiring remote sellers to collect and pay sales and use tax consistent with federal legislation.
Effective June 26, 2013, Maine sales tax applies to products transferred electronically. A “product transferred electronically” is sold in Maine if:
– the product is delivered electronically to a purchaser located in Maine;
– the product is received by the purchaser at the seller’s location in Maine;
– a Maine billing address is provided by the purchaser in connection with the transaction; or
– a Maine billing address is indicated in the seller’s business records.
A “product transferred electronically” is a digital product transferred to a purchaser electronically, the sale of which in non-digital physical form would be subject to tax as a sale of tangible personal property.
This legislation, H.P. 1079, was passed despite the Governor’s veto.
Do you sell services to consumers? Are they electronically supplied? Are your customers in the EU? Are you ready for the B2C 2015 VAT changes?
There are significant changes on the horizon for the VAT paid on electronically supplied services. Any business headquartered in any country selling broadcasting, telecommunications and electronically supplied services to EU retail customers will be affected by these changes. This includes businesses in the US, China and Australia.
The new legislation is effective from 1 January 2015. It will have the effect of changing the place of supply, and the country of taxation, of business to consumer (B2C) telecoms, broadcasting and ‘electronically supplied services’ from the country in which the supplier is established to the country in which the consumer is resident. One effect of this is that, rather than applying a single VAT rate in its country of establishment, affected businesses may be required to apply the local VAT rate in 27 different member states.
On July 5, 2013, Missouri enacted S.B. 23 which provides affiliate and click-through nexus standards for sales and use tax purposes.
Out-of-state vendors selling taxable products or services to Missouri customers should review whether activities of in-state affiliates or third parties create a sales and use tax registration and filing obligation with the state. This is relevant also for ecommerce vendors.
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.
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.
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.
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.