NEW YORK, June 14, 2012 /PRNewswire/ -- As organizations focus on how to use cloud technology in their business, KPMG International has launched a new online resource aimed at helping them navigate the tax challenges in the evolving landscape for cloud-related transactions.
The resource, Country Perspectives on Taxing the Cloud, examines how tax authorities are approaching the challenge of taxing the cloud in 18 key countries, and can be found at www.kpmg.com/taxingthecloud.
"Cloud computing is fast becoming an attractive option for managing operational and client service needs of businesses and consumers in the United States and across the globe," said Steven Fortier, principal-in-charge of KPMG's U.S. Tax in the Cloud initiative. "Yet 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 do they know if these factors are being evaluated within their organizations."
The new KPMG tool is designed to help users and providers of cloud computing services as they plan their operations and activities and work to manage their tax exposure while gaining the desired benefits from this new technology.
"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," Fortier said.
In the new online tool, KPMG member firms worldwide provide insight into how tax authorities across the globe are approaching the challenge of analyzing cloud computing from a tax perspective by examining the local country provisions in place, the likely interpretations under such provisions and potential taxes associated with cloud transactions.
Key takeaways from KPMG's current analysis include the following:
- A company moving to a cloud-based business model should examine its local country tax position to consider the character and source of the cloud income and/or payments and whether the cloud operations result in new or additional income, withholding or indirect taxes.
- Executives need to be mindful of the location of the servers and other infrastructure to take advantage of local incentives, while managing possible permanent establishment challenges made in the jurisdiction in which the infrastructure is located.
In connection with these points, KPMG's Fortier advised companies to involve their tax department early in the shift toward Cloud technology. "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."
Commenting on the new online tool, Fortier said KPMG will continue to add countries to the resource as jurisdictions provide more clarity on the local treatment of cloud transactions. Even at this stage, it is clear that significant tax issues for both providers and users of cloud do exist and that those issues multiply when the transactions cross borders, he added.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 145,000 people, including more than 8,000 partners, in 152 countries.
About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 152 countries and have 145,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
Robert Nihen/Deborah Primiano
SOURCE KPMG LLP