The Republic Act No. 12023, which took effect on 18 October, introduces amendments to the general VAT provisions of the Tax Code. It defines digital service as any service provided over the Internet or electronic networks using information technology, primarily in an automated way. This includes online search engines, e-marketplaces, cloud services, online media and advertising, digital platforms, and digital goods. The far-reaching effects of the new law are to be felt more by non-resident DSPs who are assigned unprecedented VAT responsibilities.
The Philippines enacted Republic Act No. 12023, commonly known as the VAT on digital services law
Public
Other countries
Author: Ivana Picajkić
Category:
Fiscal subject related
Views:
14
Content accuracy validation date:
20.11.2024
Content accuracy validation time:
08:05h
These are the VAT implications of the new law as far as non-resident DSP transactions are concerned:
- VAT registration: Non-resident digital service providers (DSPs) must register with the BIR for VAT if their gross sales exceed P3 million in the past three months or are expected to exceed that amount in the next 12 months. The specific registration process is not yet clear, but DSPs should stay informed about the upcoming 'simplified automated registration system' being developed by the BIR.
- Invoicing and accounting: Non-resident digital service providers must issue VAT invoices for services consumed in the Philippines. These invoices are simpler than regular local invoices and must include: date, transaction reference number, consumer identification, brief description of the transaction, amount, and breakdown of sale price by VAT status (12%, zero-rated, or exempt, if applicable). DSPs should await announcements regarding the start of this invoicing requirement. For accounting, they do not need to maintain subsidiary sales and purchase journals.
- VAT payment: The law outlines how VAT must be paid based on whether a non-resident digital service provider deals with a non-VAT consumer or a VAT-registered consumer in the Philippines. For non-VAT consumers, the DSP must directly pay the VAT to the BIR. For VAT-registered consumers, they must withhold the VAT and pay it to the BIR, using a process called the "reverse charge mechanism," similar to the existing withholding VAT.
The BIR is expected to provide details on these payment methods soon. Both parties should consider how VAT may affect their agreed pricing.
- Special rule for online marketplaces or e-marketplaces: Online marketplaces might be obligated to forward VAT on behalf of their non-resident sellers if they play a role in establishing the terms and conditions of the sale, or if they are involved in the ordering or delivery of goods.
The effects of the VAT on digital services law are far-reaching. For now, taxpayers can expect further clarifications to come from the tax authority as it designs the rules and regulations for effective implementation.
Other news from Other countries
New document was uploaded: Recorded webinar: E-invoicing for Global Retailers
Public
All countries
Author: Kristina Dosen
If you are struggling with complex e-invoicing implementations across multiple countries, and if you are concerned about mounting costs, potential delays, or compliance risks, our webinar will help you to learn how global retailers can streamline e-invoicing efficiently! With countries worldwide mandating e-invoicing, international retailers face unique challenges adapting to new regulations acros... Read more
Resolving VAT discrepancies: Leveraging South Africa’s Voluntary Disclosure Program
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
The Voluntary Disclosure Program (VDP) allows taxpayers to correct VAT errors by voluntarily reporting them, which can help reduce penalties from SARS or prevent legal action if SARS discovers the mistake independently. Applicants must meet several criteria, and if approved, SARS will issue a written agreement detailing the relief granted and any outstanding liabilities. The VDP agreement is legal... Read more
South Africa: Exemptions from Tax Invoice Requirements under Sections 20(7) and 21(5) of Ruling 27
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
On 30 September 2024, SARS passed the Binding General Ruling (VAT) 27 (Issue 2). It outlines a binding general ruling regarding the Value-Added Tax (VAT) Act, specifically addressing when vendors are not required to issue tax invoices, credit notes, or debit notes. The VAT Act outlines specific requirements for tax invoices, credit notes, and debit notes. However, the Commissioner can approve exce... Read more
The Minister of Finance in South Africa intends to introduce the Tax Administration Law Amendment Bill, 2024, in the National Assembly in the near future
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
The Minister of Finance plans to introduce the Tax Administration Law Amendment Bill, 2024, in the National Assembly soon. This Bill aims to amend several key acts, including the Value-Added Tax Act, 1991. The Bill aims to amend several key acts including the Value-Added Tax Act, 1991. The proposed amendments to the Value-Added Tax Act, 1991, include: Extended Time for VAT Accounting: The perio... Read more
South Africa’s National Treasury is taking steps to enforce the legislative changes regarding the VAT treatment od Electronic Services Providers
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
South Africa's National Treasury is set to implement legislative changes regarding the VAT treatment of Electronic Services Providers, as announced in the 2024 Budget Speech. A consultation on a reverse charge mechanism for B2B digital services provided by non-residents took place on August 31, 2024, and this new system will come into effect on April 1, 2025. South Africa’s National Treasury... Read more
Apple's Tap to Pay software, which allows sellers to accept cashless transactions without a payment terminal, has just arrived in the Czech Republic
Public
Author: Ivana Picajkić
Tech company Apple has significantly simplified payment processes for small businesses and consumers across the country by making its Tap to Pay service available in several European nations, including Czechia. Launched in 2022, Tap to Pay now complements the Czech Cvak service as a modern solution for cashless transactions that does not require a traditional payment terminal. With Tap to Pay, iPh... Read more
Hong Kong Reduces Interest on Tax Reserve Certificates
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
The Hong Kong Inland Revenue Department has announced a reduction in the annual interest rate on Tax Reserve Certificates from 0.8000% to 0.7167%, effective November 4, 2024. These certificates earn simple interest calculated monthly from the purchase date until tax payment, with interest credited only when the certificates are used for tax payments. The new rate applies to certificates purchased... Read more