1 July Tax Updates

The 1st of July will bring important updates on VAT/GST/Sales Tax around the world. Also some new tax jurisdictions are joining the consumption tax family.

Here’s what to have on your radar: 

Tax changes

Germany

To boost the economy after the coronavirus pandemic, Germany has proposed to temporarily reduce the VAT rates from 1 July 2020 until 31 December 2020.

  • Standard rate cut from 19% to 16%
  • Reduced rate cut from 7% to 5% (including eBooks)

Saudi Arabia

Saudi Arabia's VAT rate will increase from 5% to 15%, due to the COVID-19 crisis.

Bulgaria

Bulgaria has become the latest EU country to cut the VAT rate on eBooks from 20% to 9%.

New taxes

British Columbia (Canada)

British Columbia is set to become the last province to impose its state Provincial Sales Tax (PST) on non-resident providers of electronic or digital services. This includes telecommunications services. 

The 7% PST will be levied from 1 July 2020 with a VAT registration threshold of CAN $10,000 per annum.

Indonesia 

Indonesia will impose a 10% VAT on digital services, without a sale threshold. 

Non-resident digital businesses with B2C sales to Indonesian consumers now have an obligation to register, collect, and remit VAT on all sales there, from the very first one. 

Louisiana (US)

The state of Louisiana is introducing an economic nexus law.

Remote retailers must collect sales tax in Louisiana if their sales into the state (in the current or previous calendar year) hit one of the following:

  • More than $100,000 in gross revenue from sales, or
  • At least 200 separate transactions

Remote retailers must register with the commission within 30 days of meeting one of the economic nexus thresholds described above, and then start collecting taxes “no later than 60 days after surpassing either of the criteria.”

Important

You must register for tax collection before collecting any tax in a particular country!

Finally, this notification is only for informational purposes. If you’re ever in doubt as to whether you have to collect VAT, please consult a professional tax advisor or accountant.

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