- Evolving VAT Framework: The VAT rules for cross-border digital services are complex, with varying requirements for B2B and B2C transactions. The OECD’s reverse charge mechanism is commonly adopted, shifting VAT reporting responsibilities to the recipient.
- Invoicing and Compliance: In B2B transactions, invoices from suppliers do not include VAT; instead, the customer self-assesses and reports VAT. Proper invoicing must note the application of the reverse charge, and validating the customer’s VAT number is crucial.
- Jurisdictional Variations: While many jurisdictions follow the OECD model, some, like the Philippines, require non-resident providers to register for local VAT, even for B2B transactions. Compliance with varying local regulations is essential for non-resident digital service providers.
Source 1stopvat
