VAT on digital services update.

New VAT regulations in Ecuador and Paraguay came into force on January 1st 2020, bringing these countries closer to the tax revolution when handling VAT on digital services.

Ecuador

Ecuador is one of the latest countries to impose a VAT charge on the sale of electronic services to local consumers by non-resident businesses.

Previously, non-resident businesses, providing digital services in Ecuador do not have a registration obligation.
If the proposed changes are accepted, sellers will be obliged to register and impose VAT at 12% to any e-services sold in the country.

A large range of services will fall in the scope of the changes such as e-learning, music, apps, streaming films, e-books, e-journals and other internet services.

Paraguay

From 1 January 2020, Paraguay has imposed VAT to non-resident sales of digital services to consumers in the country.

This new tax will be 10% and this will be collected via payment providers – banks and credit card companies. The tax money collected by the payment providers will then be passed onto the tax authorities.

This 10% tax will be applied to electronic services such as music, apps, e-books, streaming games and internet services.