Effective April 3, 2013, certain types of software accessed via the internet or other wireless media are exempt from Idaho’s sales and use tax. Idaho taxpayers should be aware that this represents a reversal of the state’s prior treatment. [Idaho House Bill 243, enacted 4/3/13]
According to a recently published press release, France is considering to apply a super reduced VAT rate for online press publications (2,1% instead of 19,6%) and this without the approval of Brussels.
As reported in previous posts, France and Luxembourg already started on 1 January 2012 to apply (super) reduced VAT rates for e-books (5,5% in France and 3% in Luxembourg) making them the cheapest countries to sell e-books in the whole EU.
The EU Commission saw this as an infringement against the EU VAT Directive and initiated infringement proceedings against both France and Luxembourg (Case No 2012/4080).
With this new proposal to Find out more
The Washington Department of Revenue released new regulations on the taxability of software and digital products. The two new regulations, WAC 458-20-15502 and -15503 were adopted February 25, 2013, and became effective March 28, 2013. The Department issued the new regulations to clarify the impacts of previous legislation taxing digital goods and to address other tax issues related to computer hardware, software, and computer services. Taxpayers engaged in selling software and digital products in Washington should review these regulations as they may provide clearer guidance for distinguishing between taxable and nontaxable digital goods, software, and services. [Computer Hardware, Software, and Digital Products, Washington Department of Revenue, WAC 458-20-155/15501/15502/15503] Find out more
US Senate has passed the Marketplace Fairness Act yesterday which aims at introducing collection of online sales tax in the US directly from online retailers.
Next stop: House of Representatives.
On April 16, 2013, Kansas Governor Sam Brownback signed a new bill – S.B. 83, which generally creates a presumption that out-of-state retailers are doing business in the state for sales and use tax purposes based on the activities of other persons, applicable starting July 1, 2013.
The bill also adopts “click-through” nexus, applicable to sales made 90 days after the bill is published in the Kansas Register. Out-of-state retailers should be aware that, following the enactment of S.B. 83, the activities of an unrelated entity or person could potentially create sales and use tax nexus in Kansas.
Nexus based on activities of other persons
In his recent “State of the Nation” speech Luxembourg’s Prime Minister, Jean-Claude Juncker announced that the standard VAT rate in Luxembourg will increase with effect from 1 January 2015 (i.e. from the date when the new VAT rules for B2C sales of eservices will become applicable in the EU). Mr. Juncker has explained, that this VAT rate increase should help Luxemburg to counterbalance the expected loss of the VAT revenues due to new VAT rules on eservices.
Current standard VAT rate in Luxembourg is 15%. Even though the new VAT rate has not been disclosed yet, we understand that the Luxembourg’s government intends to maintain the lowest standard VAT rate in the EU also after the proposed increase. This would mean that the new standard rate will have to be somewhere between 16% and 18%. Find out more
It might well happen that in the not so far future all US online vendors with over $1 million in annual online revenue will be required to pay state and local taxes to the governments that their customers reside in. There are more than 9.600 different state and local tax jurisdictions within the US. This news makes issues related to the upcoming EU VAT 2015 ebiz changes look like a piece of cake.
A federal Marketplace Fairness Act was submitted to the US Congress in February 2013 and aims to substantially reform the taxation of the ecommerce industry in the US. PwC’s summary on the bill can be accessed here. For some more information on the taxation of internet transaction in the US we suggest you to read this report. Find out more
The Malaysian tax authority has recently issued guidelines on the taxation of electronic commerce in Malaysia. The document provides guidance on the tax treatment of e-commerce transactions, including scope of the tax liability, treatment of servers and websites in determining the location of the ecommerce income, issues on withholding tax and double taxation and examples of the various business models with relevant explanations.
A new approach to the internet taxation
While Malaysia has not implement the VAT taxation (it applies sales tax) it has introduced a unique way to tax ebiz. This is effected by imposing a withholding tax (“WHT”) liability on the Malaysian recipients (both B2B and B2C) in relation to any royalty type payments made to non-Malaysian companies. Find out more