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World VAT/GST News

World VAT News – June 2024

By June 26, 2024No Comments

Brazil

From 2026, Brazil will introduce two new indirect taxes that will replace its old tax system. These two new taxes will work in a similar way to VAT and are called:

  • CBS 8.8% (Contribuição sobre Bens e Serviços – Contribution on Goods and Services) – This is a federal consumption tax.

  • IBS 17.7% (Imposto sobre Bens e Serviços – Tax on Goods and Services) – This is a state / municipal tax.

As part of this agreed implementation, non-resident providers of digital services will become liable for collection of the new indirect taxes on the supplies that they make to the country, and under current legislations, this presently impacts both sales to businesses and consumers.

Currently, foreign businesses providing digital services in Brazil do not have to charge any taxes on their sales. This presents an unfair advantage to non-resident companies over resident providers, and by implementing this new tax on these supplies the Brazilian tax authorities hope to level the playing field.

This new tax will likely apply to a range of electronic services including advertising, streaming games, music, apps, films, e-books, e-journals, software, and internet services.

Philippines

During May 2024, the Philippines Senate voted in favour in a second reading of Bill No. 2528 imposing VAT on foreign providers of digital services to consumers. This means that the bill can now be debated and amended before a further vote is taken as to whether to move the bill on to the next stage in the authorisation process.

Currently, foreign businesses providing digital services to consumers in the Philippines do not have to charge VAT on their sales. However, to remove the unfair advantage this gives to non-resident companies over resident providers, the Philippines government are proposing that VAT at 12% will be applied to these types of transactions.

This will be applied to a range of electronic services including online advertisement services, streaming games, music, apps, films, e-books, e-journals, and internet services.

The above news was kindly provided by Fiscal Solutions (UK), www.fiscalsolutions.co.uk; contact: [email protected].