Taxing The Cloud: KMPG’s Take On Global Cloud Computing Taxation
A fresh resource, custom-tailored to help end users and service architects of cloud computing services along their journey of scheduling procedures, managing operational dynamics, planning work execution and other relevant parameters – all with the core intent of dealing with the associated tax exposure, has recently made it into the public domain: the Country Perspective on Taxing the Cloud.
The novel online tool relies on KMPG associate firms around the globe to provide detailed coverage of how taxation authorities around the world are tackling the challenge of closing in on scrutinizing cloud computing from a tax standpoint. The tool principally relies on the examination of the practical requirements of the home-market, plausible elucidation under present law and potential tax issues related to the cloud.
A number of budding cloud markets were analyzed in the study. To date, the dataset includes the United States, the United Kingdom, Switzerland, Spain, the Netherlands, Mexico, Luxembourg, Japan, Italy, Ireland, India, Germany, France, China, Canada, Brazil and Argentina. KMPG is very positive regarding the inclusion of more countries into the resource as local authorities continue to further expound the procedural treatment of cloud transactions.
Steven Fortier, principal-in-chief of KMPG’s US side of tax in the cloud enterprise, is said to have elaborated in a statement: “Cloud computing is fast becoming an attractive option for managing [the] operational and client service needs of businesses and consumers in the United States and across the globe”.
He added that “most tax authorities have yet to develop detailed rules and guidance for cloud-based operating models, and many business executives are neither evaluating the tax implications of cloud nor know if these factors are being evaluated within their organizations. Companies should expect added scrutiny as tax authorities become more aware of revenue implications they may face with the switch to a cloud-based operating model.”
KPMG strongly suggests that a company that is intent on moving to the cloud should inspect its home-state tax standing to determine the nature and basis of the cloud returns and incurred expenses. It is equally important to take into account the cloud functioning result in new or supplementary revenue, maintenance or circumlocutory taxes. High-level company management needs to be aware of the location of cloud servers and relevant infrastructure to make the most of local enticements, while at the same time contemplating potential eternal institutional challenges existent in the jurisdiction where the infrastructure is geographically located.
With this in mind, Fortier recommended that companies should hasten to engage their tax division in the transition towards cloud computing. “By doing so,” he said, “companies can best manage potential tax risks and help ensure they are not losing out on planning opportunities or subjecting themselves to additional direct or indirect taxes.”
By Humayun Shahid