[World Tax News] Chile Collects More Than US$ 1,001 Million VAT on Digital Services

Editorial Team – [2024] 159 taxmann.com 237 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. Chile collects more than US$ 1,001 million in VAT on digital services

The Chile Internal Revenue Service (SII) has amassed over US$1,001 million as of December 2023 through registering and collecting Value-Added Tax (VAT) on digital services from platform providers lacking domicile or residence in Chile.

The regulation, initiated on June 2, 2020, permitted platforms the flexibility to opt for monthly or quarterly payment schedules. Predominantly, platforms favored the quarterly arrangement. As a result, over three years since the introduction of this tax reform, 15 payment intervals have been logged, totaling over US$1.001 billion in declarations and payments, distributed among 426 suppliers.

While Chile may not have been the pioneer in Latin America to enforce VAT on Digital Services, the platform devised by the SII for international operators to register and fulfill their tax obligations has garnered international recognition.

The ten platforms that have paid the most taxes since the implementation of the tax are Google, Netflix, Apple, Spotify, Meta Platforms Ireland, Sony Interactive Entertainment, Microsoft, Amazon, Valve Corporation and Rasier Operations BV (Uber).

Source: Office release

2. IMF suggests that Romania must implement tax policy reforms in order to regain stability in government finances

The International Monetary Fund (IMF) has announced the completion of a visit to Romania, during which it proposed tax policy reforms aimed at restoring the stability of government finances.

IMF mission, led by Jan Kees Martijn, visited Bucharest from January 29 to February 1, 2024 as part of its regular engagement with the Romanian authorities and other stakeholders. Mr. Martijn issued the statement that Romania’s tax revenue is well below the level in peer countries, and too low to support public services at EU standards. Therefore, there is no realistic way forward without substantial tax policy reform.

Key options include:

i. Income tax reform: Elimination of remaining loopholes and exemptions, including by lowering the threshold for micro enterprises, and possibly making the PIT progressive.

ii. VAT reform: Increasing VAT revenue, including by taxing more items at the standard rate.

iii. Green taxes: Introducing a carbon tax in the transport and building sectors or additional excises on fossil fuels.

iv. Property taxes: Increasing property taxation, if possible by implementing the reforms already prepared.

v. Pension reform impact: Developing a mechanism to effectively stretch out the fiscal burden resulting from the pension reform.

Early discussion and communication of plans for tax reforms would facilitate planning by firms and households and improve the investment climate.

Source: Announcement

3. Belgium introduces Public CbCR

On January 26, 2024, Belgium passed legislation to incorporate the Amending Directive into the Accounting Directive (2013/34) concerning the Disclosure of Income Tax Information by Certain Undertakings and Branches (2021/2101), also known as the Public Country-by-Country Reporting (CbCR) Directive.

This directive mandates eligible multinational enterprises (MNEs) operating within the European Union to disclose specific income tax details publicly. EU Member States were required to incorporate the directive into their national laws by June 22 2023. The first financial year for public reporting will commence on or after June 22 2024.

Source: Official

4. Kuwait and Saudi Arabia to sign a tax treaty

A meeting between Kuwaiti and Saudi Arabian officials took place on January 31, 2024, as per an announcement by the Saudi Press Agency. The discussions centered on enhancing bilateral relations and cooperation, with particular emphasis on the mutual desire to establish an income tax treaty.

Source: Release