Worldwide cloud computing – an indirect tax perspective

Grazed from Bloomberg. Author: Editorial Staff.

EY has recently published the Worldwide cloud computing tax guide1to help support businesses facing the challenges presented by cloud computing. This article looks at EY’s findings and the insights into the tax treatment of the cloud in over 100 countries.

I. Background

Cloud computing has burst onto the commercial scene, affecting many industries. Generally defined as the hardware and software that supports transactions over a virtual network (i.e., the internet), cloud computing has a borderless quality that creates complexity for taxing jurisdictions and the tax teams that have to proactively manage tax risks for a product that is rapidly expanding on a global scale…

Alongside this, governments are actively investigating and writing tax laws in this area, increasing the risk that taxpayers will be caught unprepared in some countries. In a recent report2 on base erosion and profit shifting (BEPS), the Organisation for Economic Cooperation and Development (OECD) specifically identified cloud computing transactions as an area in which “international tax standards may not have kept pace with changes in global business practices.” The report further states “Today it is possible to be heavily involved in the economic life of another country, e.g., by doing business with customers located in that country via the internet, without having a taxable presence there or in another country that levies tax on profits. In an era where non-resident taxpayers can derive substantial profits from transacting with customers located in another country, questions are being raised on whether the current rules are fit for purpose.”…

Read more from the source @ http://www.bna.com/worldwide-cloud-computing-n17179882405/

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