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A Digital World

Kitty Miv, Editor
22 July, 2019

Well, never let it be said that I'm not cutting edge! In this week's column, we'll be focusing on digital taxes, and the treatment of digital transactions, beginning with Australia, where the government has taken a sideways swipe at popular online ride-hailing services, arguing that the exemption from fringe benefits tax (FBT) traditionally available for employee taxi travel does not apply to ride-sourcing services.

FBT is paid by employers on certain benefits that they provide to their employees or their employees' family or other associates.

Any benefit arising from taxi travel by an employee is exempt from FBT if the travel is a single trip beginning or ending at the employee's place of work. The exemption also applies if the travel is necessary as a result of employee sickness or an injury sustained by the employee and the whole or a part of the journey was directly between any of the following: the employee's place of work, the employee's place of residence, or any other place that it is necessary or appropriate for the employee to go as a result of the sickness or injury. However, in the latest in a series of blows against such services, the Australian Taxation Office recently clarified that the exemption is limited to travel in a vehicle licensed by the relevant state or territory to operate as a taxi.

On a broader note, and in line with moves elsewhere in the world, on July 11, 2019, France's proposed digital services tax received Parliamentary approval, following approval from the Senate.

The three percent turnover tax will be imposed (retrospectively on turnover realized from January 1, 2019) on digital companies providing advertising services, selling user data for advertising purposes, or performing intermediation services. Companies with global revenues of EUR750m (USD852m) or more and French sales of at least EUR25m will be required to pay the tax.

The tax is intended to be a temporary measure until an agreement is reached on international digital tax measures at the OECD. However, in the meantime, I'm sure the additional revenue will be welcomed by the French authorities. (Despite being not as much as one might expect, having been estimated at an additional EUR500m per year, from approximately 30 companies.)

Last but not least for this week, Singapore has unveiled proposals to exempt virtual currency transactions from GST.

Earlier in the month, Singapore's tax agency released a draft guide that includes proposals for more favorable GST rules for virtual currencies.

Under the current rules, the supply of virtual currencies – termed "digital payment tokens" by the tax agency – is treated as a taxable supply of services. Therefore, the sale, issue, or transfer of such digital payment tokens for consideration by a GST-registered business is subject to GST. When the digital payment tokens are used as payment for the purchase of goods or services, a barter trade resulting in two separate supplies arises: a taxable supply of the tokens and a supply of the goods or services.

Singapore is proposing that, from January 1, 2020, the use of digital payment tokens as payment for goods or services will be outside the scope of GST, and the exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST.

Under the changes, use of such tokens or acquiring or disposing of such will not contribute to a business's turnover for the purposes of determining liability to register for GST.

The tax agency said the guide focuses on the GST treatment that will take effect from January 1, 2020. Nevertheless, the sections on time of supply, mining and digital payment token intermediaries remain relevant to transactions involving digital payment tokens that take place before January 1, 2020.

The tax agency is seeking feedback by July 26, 2019, so why not drop them a line. Boopity-beep-beep-boop. Until next week...

Tags: Taxation

About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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