From 1 August 2022, the Chilian Internal Revenue Service has confirmed that banks and credit card companies will be responsible for withholding VAT on payments of digital services received by non-resident suppliers who are not VAT registered in Chile.
During 2020, Chile introduced new VAT rules stating that VAT should be charged at 19% on the sale of digital services supplied by non-resident (foreign) companies to consumers in the country. This was to remove the unfair advantage that non-resident companies had over resident suppliers who had to charge VAT on their sales.
However, since its introduction, many non-residents digital service suppliers have ignored these VAT rules and are still not VAT registered or charging VAT on their supplies in Chile.
In an effort to recoup this VAT, the Chilian authorities have now confirmed that from August, it will produce a list of non-resident digital service suppliers that are VAT registered in Chile. They will then distribute this to banks and credit card companies on an annual basis, who will use this list to identify if suppliers are VAT registered. If they then receive payments for these types of suppliers that are not VAT registered, they will be required to withhold VAT at 19% on any payments received in their accounts.
From January 2023, Singapore will introduce GST on imported sales of low-value goods and non-digital services to consumers at a rate of 8%.
Since 1 January 2020, there has been a requirement for non-resident vendors supplying digital services to consumers to register for GST and charge this at a rate of 7% on their sales. This is subject to the non-resident supplier, within a 12-month period, exceeding a global turnover threshold of S$1 million (approx. £586,000) and making supplies to non-GST registered customers within Singapore at a value over S$100,000 (approx. £59,000).
From 2023, the Singaporean government will extend this requirement to include sales of low-value goods and non-digital services, which do not require the customer to be physically located where the services are performed (such as online counselling, training, or coaching services). They will also increase the GST rate in the country from 7% to 8%.
This is to remove the unfair advantage given to businesses outside of Singapore over resident providers making these types of supplies. It will force non-resident businesses, who can currently take advantage of the import GST exemption for imported goods under a value of S$400 (approx. £230) or sell non-digital services without the need to charge GST, into registering with the Singaporean tax authorities to start charging GST at 8% on their supplies subject to the thresholds stated above.