Argentina have recently confirmed that local VAT is applicable to the supply of digital services made by non-resident providers to consumers in the country.
As confirmed in our December 2017 article, instead of the non-resident supplier accounting for the VAT on these transactions, the consumer’s credit card provider will be responsible for accounting for and paying the VAT to the Argentinian tax authorities as a withholding tax. This in principle will mean that a foreign supplier will not have a requirement to VAT register in the country.
This new tax will apply to a range of electronic service purchases including streaming games, music, apps, films, e-books, e-journals and internet services.
From 1 January 2020, the Singaporean government confirmed that it will introduce a Goods and Service Tax (GST) on the international sales of digital services to consumers by non-resident businesses.
At present, non-resident businesses providing digital services in Singapore do not have to charge GST on their sales. However, in an effort to remove the unfair advantage that this gives to these companies over resident providers, the Singaporean government has confirmed that it will implement GST at 7% on these types of supplies from 2020.
This new obligation will be subject to a S$ 100,000 registration threshold (approx. £54,000) and will apply to a range of electronic services including streaming games, music, apps, films, e-books, e-journals and internet services.
On 21 February 2018, a new draft Regulation containing the proposed SA VAT rules for electronic services suppliers was published for public comment. The draft Regulation will replace the existing rules which have been in place since 1 June 2014. Effectively the proposed Regulation contains the following reforms:
a) The scope of electronic services that are subject to VAT and which require that foreign suppliers of these services register, has been extended. The previously defined categories of electronic services will be removed and only educational and telecommunication services are excluded. This means that once the monetary threshold and enterprise requirements are satisfied, all other suppliers of e-services will be required to register for VAT in South Africa.
b) Non-resident suppliers of electronic services are required to register once they have exceeded R50 000 of taxable supplies in 12 months. Previously, the R50 000 threshold had no time period in which the supplies had to have been made.
c) Intermediaries and platforms through which e-services are supplied will also be required to register for VAT, where the intermediary/platform is responsible for the issuing of tax invoices and collecting payment from the recipient. No VAT registration is possible if the intermediary/platform merely enables the payment of the electronic service.
d) These proposed VAT rules apply regardless of whether the e-services are supplied to an end-consumer or to another business, as the rules do not differentiate between business to consumer and business to business supplies. This also means that e-services suppliers must issue tax invoices for all supplies made whether the recipient is a business or consumer.
e) Notably, the new VAT rules are silent on providing transitionary relief in the form of assistance from the South African Revenue Service (SARS) Voluntary Disclosure program or other modes of support, to suppliers of e-services who had a liability to register for VAT but have not done so.
f) The new rules are proposed to come into effect on 1 October 2018, comments suggesting these identified administrative/compliance issues be remedied must be submitted to SARS by no later than 22 March 2018.
Thailand is proposing to introduce VAT at 7% on the provision of electronic services in the country.
At present, foreign businesses providing digital services in Thailand do not have to charge VAT on their sales. However, in an effort to remove the unfair advantage that this gives to non-resident companies over Thai resident providers, the Thai government is proposing to implement VAT at 7% on these types of transactions.
If introduced this new tax will be subject to a Baht 1.8 million threshold (approx. £41,000) and will likely apply to a range of electronic services including streaming games, music, apps, films, e- books, e-journals and internet services.
United Arab Emirates
The United Arab Emirates (UAE) have confirmed that e-commerce supplies of both goods and services made by non-resident (foreign) suppliers to consumers in the country, are to be subject to VAT at 5%.
These types of supplies are subject to the same VAT registration procedure and threshold as other supplies made in the country, which is currently set at Dh 375,000 (Approx. £73,000).
The UAE is part of the six-country Gulf Cooperation Council (GCC), which planned to implement a harmonised VAT regime by 2018. However, out of the six countries only the UAE and Saudi Arabia managed to implement VAT from this date and the others, consisting of Kuwait, Qatar, Bahrain, and Oman, are still to introduce VAT in their countries.
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Disclaimer: The information contained in the present page is general and does not constitute legal advice. Before taking any decision or action on the above information you should take the appropriate professional advice.