Taxamo's take on global digital tax developments

The Digital Economy: 1993 v 2013 

So, here’s an interesting EU VAT rules stat for you: Taxamo merchants supplied digital services to customers in 108 countries during the first quarter of 2015.

Proof, if any were needed, that the digital economy is ignorant of borders and in terms of regulation requires a global response. This is why plans for the taxation of the digital economy are well underway worldwide.

Some jurisdictions such as Norway, South Africa, Switzerland, and – more recently – the EU have already introduced taxation measures aimed at ‘levelling the playing field’ and recouping tax from non-domestic providers of digital services.

Australian plans for a ‘Netflix tax’

More recently Australia has been grappling with the idea of introducing a new goods and services tax (GST) on business-to-consumer (B2C) services such as streaming services; the download of images and games; web hosting; and cloud storage services. The new GST has become known as the ‘Netflix tax’. The latest news is that the Federal Government will introduce the tax in their upcoming May 12 budget.

The situation in Australia was superbly encapsulated in an opinion piece by Alex Malley, CEO of the Certified Practising Accountants Australia, when he summed up the challenges that face Australian legislators:

The “inalienable truth” is that Australia’s tax system is not keeping pace with the activities of multinationals, suppliers of eservices and the demands of consumers in the digital, interconnected global economy. There are implications for revenue erosion and consequences for the competitiveness of Australian businesses. Australia’s “modern” tax system has evolved in fits and starts from around Federation when the emphasis was on taxing goods and commodities and quality infrastructure was dirt tracks, paddle steamers and the telegraph service.

And this is the problem for legislators the world over – the digital economy has emerged and blossomed, but legislative systems have stalled and not kept apace.