VAT on Digital Services in Chile and the Ukraine
Chile is extending their VAT rules to include foreign businesses that provide digital services to consumers in Chile.
Beginning 1 June 2020, Chile will apply a 19% VAT on foreign-supplied digital services. Foreign digital service companies will now have VAT registration and collection obligations for their sales to customers based in Chile.
Some of the affected digital service will include, but not limited to:
- Supply or delivery of digital entertainment content – videos, games, music, streaming and downloads of books, magazines and newspapers;
- Storage, software, platforms
It has been estimated that the VAT imposed on foreign-supplied digital services could raise $40 million USD annually for the Chilean government.
The Ukraine is also looking to expand its VAT reach for non-resident providers of digital services, announcing plans to begin collecting VAT from these types of providers in January 2021. This includes services such as:
- Providing advertising services and mobile applications;
- Streaming or downloads of music and videos;
- Online gaming;
- The supply of images/texts, including e-books, magazines and photographs;
- Dating websites;
- Web services