Kiribati VAT on Digital Services: Tax Guide for Non-Resident Providers

The Kiribati VAT Act (Principal Act), which came into force on January 1, 2014, already included provisions paving the way for the introduction of a tax framework for non-resident digital service providers (NRDSPs) to register for VAT if they exceed the registration threshold. 

It should be noted that these original provisions(taking into account that it had passed 12 years), “look” like they left a loophole to interpretations of the place of supply rules, reverse charge, and not enough “clarity” for determining the “full” framework for non-resident digital service providers when they make supplies of remote services to local customers.

Kiribati VAT on Digital Services

New Framework 

The Value Added Tax (Amendment) Act 2025, which came into force on January 1, 2026, reformed the place-of-supply rules for NRDSPs, the reverse-charge rules, and “enriched” the VAT framework for NRDSPs. This was a “necessary” and expected regulatory move to eliminate “any” potential misinterpretation if “there” were any. 

Technical requirements and open space for interpretation were left out.

Kiribati VAT on Remote Services framework is established in alignment with the global best practices for taxing the emerging digital economy. After a few years of continuous development of the VAT regulatory framework, the system is ready, and non-resident digital service providers that make remote supplies to local customers should get familiar with the new rules. 

Timeline 

The Value Added Tax(Amendment) Act 2025 came into force on January 1, 2026. 

VAT Compliance for Non-Resident Digital Service Providers 

A remote service shall be treated as supplied in Kiribati when the service provider does not have a place of business in the country and the service is supplied to a Kiribati resident. 

Registration

Non-resident digital service providers should register for VAT if any of the following are reached: 

• At the beginning of any 12 months, if there are reasonable grounds to believe that the total value of taxable supplies will exceed the registration threshold of AUD 100,000, or 
• At the end of any 12-month or lesser period, if, in that period, the expected total revenue of taxable supplies will exceed the AUD 100,000

Taking into consideration that the registration threshold of circa USD 67,000 could easily be surpassed by the app stores or enterprise providers of software solutions, many electronic distribution platforms are expected to register for VAT in Kiribati. 

Kiribati has put in place a “simplified registration” application for NRDSPs, a specifically designated VAT return form, and remittance management. 

Place of Supply Rules 

Kiribati VAT framework for determining the place of supply rules for remote services is in total sync with OECD guidelines. If the recipient of the remote services acquires the remote service from a foreign supplier, and there are at least two conditions met from the list below, the place of supply for remote services is in Kiribati: 

• The recipient’s billing address; 
• The Internet Protocol address of the device used by the recipient or any other geo-location method; 
• The recipient’s bank account details, including the account the recipient uses for payment or the billing address held by the bank; 
• The mobile country code of the International Mobile Subscriber Identity (IMSI) stored on the Subscriber Identity Module (SIM) used by the recipient; 
• the location of the recipient’s fixed land line through which the service is supplied to the recipient; 
• or any other relevant information. 

When two or more conditions are met, the foreign supplier of remote services shall treat the transaction as B2C only if it hasn’t received a notification from the recipient of his/hers VAT status, or that the recipient(unregistered business) should collect VAT under the imported services VAT framework.

B2C Remote Services

Non-resident remote service providers that provide services to local consumers should charge, collect, and remit VAT at the rate of 12.5% on each B2C supply. 

B2B Remote Services

As regards B2B supplies of remote services to local tax-registered persons, the resident taxable person should treat the supply as the import of services. The local registered business should self-assess VAT and report it under the import of services framework. 

Scope of digital services 

The Value Added Tax(Amendment) Act 2025 defines electronic services(remote services) as the development, maintenance, or access to any of the following when provided through the internet or a similar network: 

The online supply of e-books, music, games, apps, and software

• Websites, web-hosting services
• Cloud-based services
• Podcasts and any form of digital content
• The supply of images, text, and information
• Remote service provided through an electronic marketplace
• Digital products
• Streaming services

Digital Marketplace

Deemed Supplier provision 

The VAT Amendment Act 2025 introduced the definition and technical concept of the electronic distribution platform(EDP) as it comes to the provision of electronic services by the underlying supplier. Electronic distribution platform operates under the framework of the deemed supplier(accountable for VAT), when it facilitates(under the conditions explained below) the supply of digital services supplied by the underlying supplier to a consumer based in Kiribati. 

The electronic distribution platform includes the following business model types: a website, internet portal, gateway, online store, distribution platform, or other similar marketplace or platform, and does not include a marketplace that solely processes payments.

The deemed supplier provision is part of the VAT framework on digital services in Kiribati. The deemed supplier provision is triggered when the following conditions are met: 

Pre-conditions ↓

1. An electronic distribution platform is a foreign person without physical presence in the country
2. Underlying supplier isn’t registered for VAT in Kiribati;
3. Recipient isn’t a VAT-registered person or an unregistered business entity

The Platform Operator does any of the following:

• Authorises the charge to the recipient of the supply 
• Authorises the delivery of the supply to the recipient of the supply,
• or sets the terms and conditions under which the supply is made;

When the above conditions are met, the operator of the marketplace becomes accountable for VAT on the underlying supply of remote services. 

VAT Declaration and Remittance 

Non-resident remote service providers should file the return using the  Simplified VAT Return for Foreign Suppliers, prescribed by the Tax Administration. 

The return should be filled until the 15th day following the reporting period(quarter). The tax should be remitted within the same deadline. 

Penalties

Non-resident digital service providers could face different types of fines and penalties for late registration, late filing, and late payment. Some of the penalties that NRDSPs could face include:

• Late filing or non-filing penalties include a late filing fee of AUD 30 per month or part of a month.
• Late payment penalty of 15% on the unpaid amount due.
• Responsible persons shall be charged with 15% interest that accrues on a yearly basis on the unpaid tax due.

How to Stay Compliant 

The Kiribati VAT regime for non-resident providers of digital services has been significantly reshaped with the latest amendment to the VAT Act. Since the adoption of the VAT Amendment Act, which came into effect on January 1, 2026,  the “missing” technical clarifications and requirements for the NRDSPs have been successfully resolved. 

We have continuously followed the legislative updates concerning the introduction of the VAT regime for overseas providers of digital services. 

The advisory role offered by 1stopVAT for these providers extends from understanding the threshold exposure for registration, accountability for VAT, assistance with the return preparation, and remittance of the owed tax.

Where we cannot manage your VAT requirements directly, we have a great network of local tax agents who will take care of this. 

In addition to successfully managing your registration, we can offer additional services for digital service providers in Kiribati, such as: 

• Assistance with Tax Reporting
• Tax Advisory and Ongoing Tax Management
• Correspondence with Tax Authorities

Frequently Asked Questions