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Lack of Seller Check Can Enables VAT Fraud: The Impact of EU and UK Marketplace Liability Loopholes

A platform specializing in second-hand technology, recently alerted the French tax authorities that a competing e-commerce platform may not be performing adequate checks on its sellers. According to the Platform, this alleged negligence allows some sellers to engage in VAT fraud, offering prices up to 20% cheaper than on other platforms, thereby distorting competition. A Legislative Loophole Affecting VAT Collection …

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From Likes to Liability: Navigating the Tax Maze in the Predicted Trillion-Dollar Social Commerce Market

Social commerce is rapidly transforming the retail landscape, with predictions of it becoming a trillion-dollar industry by 2028. This surge is already evident—according to a recent MGH survey, over half of consumers now turn to social media for gift inspiration. As social platforms become central to the shopping journey, complex questions about tax liability emerge, particularly concerning Value Added Tax …

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Key Tax Considerations When Launching a Platform

The platform economy is revolutionizing how we transact, connect, and create value. A platform is more than just a digital marketplace—it’s an ecosystem facilitating interactions between two or more groups, such as consumers and producers. By harnessing network effects, platforms grow and scale rapidly without owning the assets exchanged. This scalability has enabled platforms to dominate global e-commerce, now accounting …

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Customer Location Complexities: The Tax Dilemma for Online Businesses

The checkout page is the “holy grail” of online commerce. It’s where the online sales journey is finally and successfully completed, but it’s also the “graveyard” where over 70% of shopping carts are abandoned! The stakes are high, and businesses go to great lengths and expense to create seamless customer journeys that lead to successful transactions. Yet, the dramatic challenge …

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The enhanced significance of an online marketplace’s relationship with its sellers

As new rules covering the cross-border supply of online sales rolled out globally, many businesses have been caught unawares by the hidden complexity of filing and paying VAT. It sounds like a simple process: filing and paying tax, it is anything but. These businesses invested a lot of time and resources on the registration side in anticipation of filing returns …

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Selling online globally: the hidden complexities of filing and paying VAT

As new rules covering the cross-border supply of online sales rolled out globally, many businesses have been caught unawares by the hidden complexity of filing and paying VAT. It sounds like a simple process: filing and paying tax, it is anything but. These businesses invested a lot of time and resources on the registration side in anticipation of filing returns …

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DAC7 and the difficulties involved in data acquisition and validation

As the first DAC7 deadline approaches online platforms are beginning to squirm. Those platform operators with obligations to comply with the European Union’s (EU) DAC7 requirement had circled January 31, 2024, some time ago but now the reality is hitting home: acquiring data is difficult, validating it even more so. In this article we are focusing on the EU’s reporting …

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Assessing liability when multiple platforms are involved in an online sale is complicated

The terms ‘marketplace facilitator’, ‘intermediary’, ‘electronic distribution platform’, or ‘electronic interface’ are used across the globe in various tax rules to define the platform that is liable for the collection of VAT/GST/sales tax and are, effectively, interchangeable. There are many different platform business models and the OECD’s March 2019 report The Role of Digital Platforms in the Collection of VAT/GST …

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The Rise of the Platform Economy: Anticipating the needs of today & the future

We are moving to a future in commerce that goes beyond what we are used to today. That future is the platform economy where we will have access to everything, everywhere, all at once. While the multiple Oscar-winning movie of that name flows between different universes, consumers will flow between different platforms as well as platforms on platforms. Indeed, the …

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At your service: broadening a digital platform’s scope for VAT/GST liability

1. The perfect gig: tax authorities and online platform business models When tax authorities leverage your business model for the collection and remittance of tax then it should be treated as a badge of honour. This is precisely what has happened when focusing on the phrase ‘platform economy’. This phrase has become synonymous with forward-thinking initiatives by jurisdictions across the …

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