On 1 January 2015, the new EU 2015 VAT rules came into effect changing the place of taxation in respect of all supplies of telecommunications, broadcasting and e-services to consumers in the EU, from the (single) place where the supplier is located to the (multiple) places where the customers belong.
Following the recent National Budget speech in South Africa, various proposals were tabled for consideration including a proposed amendment to the Electronic Services Regulation No. 37489, dated 28 March 2014.
Albania joined the group of countries which require non-established e-service providers to register for VAT for supplies made to private individuals.
Effective from 1 January 2015 the Albanian VAT legislation deems the place of supply of “telecommunication, transmission and electronic services” to non-taxable persons to be where the non-taxable person receiving the service is “placed, has a permanent address or resides usually”, regardless of the place where the supplier is established.
The Luxemburg tax authorities were rather quick to the react on the ECJ’s recent decision on the VAT treatment of e-books. As reported in our previous post, in the infringement procedure against Luxemburg and France the court held that these countries incorrectly applied reduced VAT rate to the sale of e-books.
It is confirmed in a “Circular” published by the tax authorities on 16 March that Circular 756 is revoked with effect from 1 May 2015, and as of that date the standard VAT rate of 17% should be applied to the sale of e-books. (Please refer to the news update on PwC’s GlobalVATOnline.)
The Tax Authority of Buenos Aires (AGIP) has established a new turnover-based (i.e., provincial sales tax) withholding tax system for foreign suppliers of e-services to Argentinian private consumers located in Buenos Aires (B2C supplies).
According to initial provisions of the new regime, effective February 1, 2015, withholding agents (Argentine credit card companies) that collect payments for such services should withhold 3% turnover tax from the payments made by final consumers to the non-resident service providers. Credit card companies have, however, formally asked the AGIP for additional time to make the necessary amendments to their systems, enabling them to identify whether the payments relate to taxable services to be used in Buenos Aires. As a result, the AGIP has postponed the enactment of the new regime until withholding agents can adequately modify their systems to be able to collect the tax.
The court held that, in line with the VAT Directive and Implementing Regulation, e-books qualify as electronically supplied services, and as such reduced VAT rates cannot be applied. Therefore, the VAT treatment of printed books (or more precisely, “books on of all physical means”, according to the VAT Directive), which are taxable at the reduced VAT rate in most EU countries, cannot be extended to e-books. In this respect, the ECJ also quoted its previous decision in the Finnish K Oy case, in which the court decided that the reduced VAT rate may be used for the sale of books on CDs or USB siticks, as these are “physical means”.
Accepting the ECJ’s argumentation and strict interpretation of the relevant legislation, the only option to use the reduced VAT rate for e-books as well, is to change the legislation. This is likely to be done as part of an overall review of the VAT system, which will be a longer process.
The government in India announced its Budget (including tax and policy proposals) on February 28, 2015. As this is stated to be the first serious Budget for the new government after being elected 8 months ago, the government likely will push through significant policy measures to revive economic growth and boost foreign investment. There is also high expectation from foreign investors and multinational companies for the government to address several long standing and pressing tax issues.
The Swiss Federal Council has published its commentary to the partial revision of the VAT Law. If the draft legislation is approved by the Swiss parliament, the changes will come into effect on 1.1.2016. Among other changes we set out below those which are most relevant for ebiz & e-commerce.
The Texas Comptroller of Public Accounts has recently determined that electronically downloaded software licensed by a Utah corporation to Texas customers constituted physical presence in Texas sufficient to establish sales and use tax nexus. According to the decision, nexus was established because the software was characterized as tangible personal property and the Utah corporation retained all property rights in the software, which was physically present and generating revenue in Texas. The Comptroller upheld an Administrative Law Judge (ALJ) determination that the corporation had an obligation to charge and collect use tax from customers, and denied refund claims of sales tax paid and an interest waiver. [201409970H; SOAH Docket No. 304-13-5657.26; CPA Hearing No. 106,632, Texas Comptroller of Public Accounts (9/19/2014)]