Whilst the vast majority of the recommendations are focused on corporate tax and transfer pricing, there are also specific proposals in respect of indirect tax. Action 1 which focuses on the digital economy, contains specific references to BEPS issues arising with respect to indirect taxation, as follows:
- B2C supplies;
- remote digital supplies to exempt businesses / remote digital supplies to multi-location enterprises; and
- VAT/GST on low value imports.
- The place of supply for B2C services should follow the destination principle, i.e. collection of VAT on B2C transactions in the customer location. To support this change, a simplified registration and compliance regime, similar to the EU Mini One Stop Shop, should be put in place for non-resident suppliers. This is likely to increase the number of local VAT registrations and VAT liabilities.
- For B2B ‘remote digital’ supplies, the place of supply should be where the customer’s business establishment is located (where a business is established in more than one jurisdiction, taxation should accrue where the establishment using the service is located), with a requirement to apply a reverse charge. PwC: Adapting to changing environments: BEPS & VAT - Tax