Kitty Miv, Editor
01 April, 2021
This week, we will be looking at digital taxes, both in terms of implementation and scope, starting with the UK, where HMRC has provided an update on the value-added tax treatment of digital publications, pending a potential final appeal by News Corp before the Supreme Court.
HMRC has said there have been no changes in its policy which, it explained – in line with a recent Court of Appeal judgment – continues to be that supplies of digital publications before May 1, 2020, are standard rated (with the case in question concerning supplies prior to May 1, 2020, because the UK introduced a VAT zero rate for supplies of certain e-publications from that date).
As HMRC's policy has not changed, any claims made in reliance of the Upper Tribunal decision in News Corp will be rejected, the tax agency stated.
Sticking with the UK, and the Government has pushed forward a decision on whether to introduce a new tax on digital sales until later this year.
The Government has released an interim report on the review into business rates, where the potential online sales tax (OST) was first discussed. The document sets out the responses to last year's call for evidence, with a final report to be released in the fall.
Meanwhile, in terms of digital tax administration, in the BES Islands (the Dutch Caribbean islands of Bonaire, Sint Eustatius, and Saba) announced recently that personal income tax returns may newly be filed online. Tax returns can be filed through the MijnCN portal, which was launched in January this year. The form became available for filing on March 18.
And in Kosovo, on April 1, the tax administration is launching a new electronic service for the declaration of withheld taxes. The electronic system must be used for returns for the period March 2021 onwards.
Last but not least, in the United States, it emerged that the US is still considering introducing taxes on six countries' exports in response to their digital services tax regimes.
On March 26, 2021, the US Trade Representative (USTR) announced the next steps in its Section 301 investigations of digital services taxes adopted or under consideration by 10 US trading partners.
In June 2020, USTR initiated investigations into digital services taxes proposed or introduced in Austria, Brazil, the Czech Republic, the EU, India, Indonesia, Italy, Spain, Turkey, and the UK.
In January 2021, the USTR concluded that the digital services taxes adopted in Austria, India, Spain, Turkey, and the UK were discriminated against US digital companies, were inconsistent with principles of international taxation, and burdened US companies. It considered these are actionable under Section 301 of the Trade Act of 1974, which gives the USTR broad authority to investigate and respond to a foreign country's action which may be unfair or discriminatory and negatively affect US commerce.
USTR has now said that it is proceeding with the public notice and comment process on possible trade actions in respect of these six nations.
The USTR has, however, terminated its investigations into the DSTs of Brazil, the Czech Republic, the EU, and Indonesia, as the countries have not adopted or implemented the digital services taxes under consideration with the US investigations were initiated.
Until next week!
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