Before the internet, VAT laws were designed for domestic sales, but the digital economy’s rise has challenged these traditional rules. To address this, governments are mandating remote vendors to register for, collect, and remit VAT on digital sales. Over 110 jurisdictions have implemented these rules, with more in the process. Phase 1 introduced the rules, while Phase 2 focuses on enforcing them. This shift is due to the belief that taxpayers now understand the rules, and noncompliance may be deliberate or criminal.
Source The Tax Advisor
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