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DigitalOcean to charge 15% service tax to Indian customers
Received the following email from DO today:
Hello,
Moving forward, charges on your invoices—including this month’s invoice—will increase due to a new ruling by the Government of India. We know this a sudden change so we want to help you with this month’s invoice and aid you in updating your account information
First, if are a business with a Sevice Tax ID, we ask that you enter it into the Service Tax ID form on the Billing page.
The new ruling has determined that the Service Tax of 15% is applicable to cloud services including DigitalOcean starting December 1 (this month) for any account with a tax location in India. You will see this increase reflected on your next invoice on January 1, 2017--unless you are a business entity that has inputted their Service Tax ID. You can read more about the ruling, Service Tax IDs for businesses, and details in our FAQs.
We know this is sudden and want to help you adjust. Therefore, we are adding a credit to this month’s invoice to offset the 15% increase. You will see the 15% credit added to your January 1, 2017 invoice.
Please see our Support page for further questions and screenshots on how to update your Service Tax ID. As always, we are here to help.
Sincerely,
Team DigitalOcean
More info: https://www.digitalocean.com/help/pricing-and-billing/tax-help-india/
Circular by the Indian Government: http://www.cbec.gov.in/htdocs-servicetax/st-circulars/st-circulars-2016/st-circ-202-2016
Comments
If you are a Indian resident you could always find a US-based reseller of DO and signup through them thus avoiding the tax
Just wondering, how to US based hosting company related to Indian government and taxes?
if you are selling services to any country you are obligated to declare your income and pay the taxes there.
is not work ...
you need to have a registered company , as person is just not work.
Same legislation has been implemented in Russia, and Google chose to just get rid of all non-business customers on their Cloud services, than have to calculate and pay VAT for them. Guess this was not an option for DO, with their amount of Indian clients and an actual DC in India. Google Cloud on the other hand is not very popular in Russia.
That simplest way to earn money on laws
DING, this - sure, you can stop selling to Indians, but at some point it is just a simple cost/profit calculation and....
The cost here is lost customers, not the tax - the tax is paid by the end-user. It's a similar system as in the EU with state (not federal) issued VAT IDs that can be auto-verified and added for removal of it.
I stopped using DO when they opened an office in Canada and started charging 13% tax.
Can use pretty much any other cloud provider with no 13% penalty.
fyi this affects all EMEA and UK, not only Russia.
Sounds like US based companies just trying to charge taxes users from overseas, even where no jurisdiction for additional income like EU inside members. That abnormal situation. Taxes can only be in the country or of the Union
The laws are absolutely unrelated though, only the EU has a unified one and this is the basic VAT code existing since forever + VIES now.
It seems that a kind of soft colonizing country as it was many years ago when India, US in the Washington times and other countries pay taxes to the British Crown, and sought independence. Now everything is back? The country is paying taxes in another country is not independent
Props to DO for following the law. This is how is done boys. Shame on you if you evade paying taxes to your own country.
@jenkki you're so wrong. FYI, WTO is the jurisdiction.
Oh yeah .. Only this is why it always works unilaterally
Oh yeah .. Only this is why it always works unilaterally
DO doesn't have a choice, they either have to pay it from their pocket or charge end users.
Eesh, I've been paying tax since early 2015 (13% Ontario/Canada tax) on my droplet, deal with it, it's just something you have to live with.
@jenkki It's not unilateral at all. Here is an interesting introductory article:
https://www.taxamo.com/blog/eu-vat-rules-global-plans/
The USA are of course late at the game, as usual.
Now I'm praying Vultr doesn't make an Indian POP.
Credit hoarder here.
DO has a legal presence in India. They have nodes, offices and workers there.
I don't know about the law in India - but the law in Russia requires any IT business that sells to Russians to be registered in Russia and remit tax. Small, foreign companies probably ignore it, but they wouldn't if they had a presence there.
Compared to EU VAT rates (most of which are >=20%), 15% is not so bad.
For a $5 DO, that's $0.75 more than before. That's like a day's wage out there, right?
not truly but yes the minimum wage rate, below which you are in poverty line.
50 cents /day. Anyhow this is not necessity item. With new law coming soon it could be bet12-18%. DO must be having some king of registered business here in India, so to apply Service tax to locals and there sales is certainly above Rs. 1 million.Well, not really. According to
http://www.tradingeconomics.com/india/wages
the so-called Average Daily Wage Rate, which refers to "the overall average wage that a worker gets per day in the manufacturing, mining and plantation sectors," was 272,19 INR a day in 2014, which is just above 4 USD. (Yes, this isn't much, but note the sectors involved.)
India is a big country, with many people earning much better than this, not to mention that those people likely to be interested in renting a DO droplet in India are definitely earning much better than this.