Snapchat, the image messaging platform founded in 2011, was valued at USD$40 billion in early March after a record-breaking IPO – making it more valuable than Delta, Target, and CBS.
These eye-watering figures are yet another example of how the sale, download, use, and sharing of digital imagery, music, and video is now big business. According to IBM we create 2.5 quintillion bytes of data every day. The sources of this data boom are everywhere online with all major social media sites depending heavily on user-generated images and videos. Parallel to this is a booming industry in the purchase and download of such digital images and videos. Let’s first focus on some key market indicators:
Where there is a new, and successful, business model it is inevitable taxation will follow. This is what is now happening in the realm of digital taxation.
Advances in technology have allowed markets to develop that span the globe, consumers - no matter their location - can now purchase digital services at any time and from anywhere.
The cross-border purchase and download of digital imagery, music, and video are among the transaction types that international tax authorities are targeting. They are doing so based on new taxation models as recommended by the Organisation for Economic Co-Operation and Development (OECD) in Action 1 of its seminal 2015 Base Erosion and Profit Shifting (BEPS) report. The most popular model (with variations of the same theme in use in the European Union, Norway, Switzerland, New Zealand, Russia, and soon to be in law, from July 1, in Australia) is to base taxation of such digital transactions on the location of the consumer.
The key point here is that the new age of digital taxation places the burden of compliance squarely on the shoulders of digital businesses. Affected businesses now need to be aware of, and comply with, the host of existing and future domestic laws that impact the sale of digital services to consumers globally.
Taxes have a nasty habit of causing problems if they are ignored.. These legislative changes need to be factored into all affected business models as compliance will have an effect on existing, and new, revenue streams.
Taxamo, however, is one step ahead. By partnering with us we take on a business’s digital tax liability in impacted countries, thus allowing the business to simply concentrate on their core business. We remove the regulatory headaches attached to modern-day international e-commerce.
We also know that every business is different, we use this knowledge to create bespoke solutions for each partner.
We will tend to your global tax liabilities so you can continue to sell your services.
The information contained in this publication (“Information”) has been provided to you for general information purposes only and we recommend that you obtain professional advice before acting or refraining from action as a result of the Information. Taxamo accepts no liability for any loss occasioned to any person acting or refraining from action as a result of the Information.
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