Beyond the EU VAT: Global Perspectives on VAT/GST in the Traditional and Global Economies

Abstract

In this chapter, we reflect on the issues of the traditional scope of VAT and how the VAT deals with the challenges created by the sharing economy, “free” digital services, and crypto-currencies. We consider the issues from the perspective of our own jurisdictions (Australia, South Africa, Singapore, and China).

Unsurprisingly, the analysis reveals that the digital economy issues facing these four non-EU VATs are much the same as those facing the EU VAT. In all four regimes, the treatment of the “sharing” part of the “sharing economy” depends on the character of the underlying supply and the treatment of such supplies in the relevant jurisdiction. In Australia, Singapore, and South Africa, substantial registration thresholds for small businesses have a significant impact on the VAT/GST treatment of the sharing economy, while in China the non-registration of individuals has a similar effect. Australia and South Africa have rules to tax inbound services using a foreign vendor registration regime, which ensures that the supplies by the relevant sharing economy platform to its users can also be taxed. Singapore recently announced its intention to introduce such rules. China, in contrast, does not allow foreign vendor registration, but local conditions – and the focus on using local Chinese platforms – reduces the impact of this restriction in practice.

Australia is the first of the four countries to have responded to the VAT/GST challenge of crypto-currencies by amending its GST law with a suite of comprehensive changes to ensure that crypto-currencies are subject to the same rules as fiat currencies, while not actually being treated as such. China, in contrast, has banned the use of crypto-currencies altogether.