KPMG has created an online resource regarding taxing of cloud computing services by tax authorities in various countries. Called as Country Perspective on Taxing the Cloud, the online resource aims to aid providers and users of cloud services in planning their activities and operations as well as work in order gain tax benefits from the cloud computing technology. As an online tool, member firms of KPMG around the world provide insights on how cloud computing services are analyzed by tax authorities all over the world. The tax provisions of each country are examined and interpreted so that potential cloud computing taxes can be generated in order to help the public.
KPMG has studied tax provisions of the United States of America, United Kingdom, Switzerland, Spain, the Netherlands, Mexico, Luxembourg, Japan, Italy, Ireland, Indonesia, India, Germany, France, China, Canada, Brazil, and Argentina. Other countries will be included in the resource as these countries come up with clearer tax treatments for cloud computing transactions.
According to Steven Fortier, KPMG’s principal-in-charge in the US Tax in the Cloud project, cloud computing has become popular in managing client and operational service needs not only of consumers but of businesses as well. However, many tax authorities around the world have not yet developed detailed guidance and rules regarding taxation of cloud computing services. Even business executives do not evaluate tax implications of cloud computing transactions. Also, they do not have knowledge if such tax implications are even being evaluated within their companies. Because of new tax regulations on cloud computing, businesses can expect additional scrutiny as these tax authorities look into their revenues when they convert to a cloud operating model.
Furthermore, KPMG suggests that a business move to a cloud-based model by first examining its local tax position in order to consider the source and character of cloud payments and/or income and whether such cloud transactions can give them more indirect or withholding taxes, or income. Business executives must take into consideration the location of their infrastructure and servers in order to take advantage of tax incentives at the same managing a probable permanent establishment challenges they have to face where their infrastructure is located.
KPMG also recommends that if companies plan to tap the cloud computing technology, they must include their tax department so that they can manage any potential tax risks they may face and make sure that they do not lose on opportunities or subject the company to new indirect or direct taxes. The online resource tool is found here.