- Taxation of digital services in Asia is changing to match global trends
- U.S. businesses need to understand these new tax requirements for operations in Asia
- The Philippines recently introduced VAT on digital services, aligning with other international practices
- Service providers must register and handle VAT, GST, or consumption taxes if their services are digital or electronic
- Digital services are generally defined as services delivered over the internet with minimal human intervention
- VAT or consumption tax primarily affects local consumers in B2C transactions, unlike B2B where tax obligations can shift to the recipient
- The location of service providers does not affect tax collection obligations within the consumer’s country
- Service providers need to verify business status to determine correct tax treatment of transactions
- EU has a centralized system for VAT registration and filing, while other countries require local registration
- Some countries set local revenue thresholds for tax obligations, like Thailand’s US$54K limit
- Tax rates vary, with Japan and Korea at 10% and India at 18%
- Digital service platforms have specific VAT obligations due to their role in e-commerce
Source: bpm.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
