TaxTech – April 29th, 2019

Russia – State Duma approves right to recover input VAT on exported services

Good news for Russian companies providing services to customers abroad. Russia’s State Duma (one of the Russian Parliament’s two chambers) approved a bill that allows taxpayers to recover input VAT on goods, works and services used in providing services outside Russia (exported services). Services currently already VAT exempt are not affected. If the bill will pass through the next two stages and becomes law, this provision will represent a major change in Russia’s VAT rules.

To date, if Russian companies provide services to customers outside of Russia, they are not allowed to deduct the input VAT relating to these services. This could, therefore, cause an additional cost for these Russia companies, giving them a competitive disadvantage.

More information can be found HERE.

Switzerland – New rules for composite supplies

The standard rule in Switzerland when performing combined supplies (multiple goods and/or services) is that each supply follows its own respective VAT treatment. However, a specific rule deals with how to assess whether these combined supplies should be regarded as a single supply, with a single VAT treatment. Switzerland adopted new rules, clarifying the rules.

According to Swiss VAT rules, a combination of supplies forming a whole may be treated as a single supply if they are provided for a single, global price and the value of the principal supply represents at least 70% of the total consideration. This “single supply” rule applies to the place of supply, as well as the applicable VAT rate/exemption.

Under the new rules, this percentage is reduced from 70% to 55%. More on this can be found HERE.

Indonesia – New rules on e-commerce on hold

Where other countries are introducing new rules to levy VAT, GST or sales tax from e-commerce businesses, Indonesia is taking one step back. The Indonesia Minister of Finance withdrew and revoked a regulation concerning the imposition of VAT on e-commerce transactions before the regulation became effective.

The regulation was supposed to take effect on 1 April 2019 and would have imposed VAT on all e-commerce transactions and include a “sales tax on luxury goods” —regardless of whether the trader or service provider was a “taxable entrepreneur”. More on this can be found HERE.

This seems to be going against the trend that can be seen all around the world. Countries such as the United States, the UK, Germany and India are increasingly leaning on online marketplace platforms to take a role in collecting VAT or GST from foreign established sellers. The OECD is recommending that tax authorities lean on digital companies to crack down on the avoidance of consumption taxes.

We will certainly see more on the taxation of the digital economy in the coming years. See also THIS article.

Kuwait – Implementation of VAT on 1 April 2021

Kuwait’s Ministry of Finance is currently planning to implement a selective excise tax regime on tobacco products, energy and carbonated drinks from 1 April 2020 and a value added tax (VAT) regime from 1 April 2021. Kuwait will be the fourth GCC Member State to implement VAT, following Bahrain, Saudi Arabia and the UAE. The VAT rate in Kuwait will be 5%.

United States – E-commerce businesses still struggling with new sales tax requirements

A lot has happened in a year since the Wayfair decision was given. This decision made it possible, or rather obliged, states to collect sales tax from e-commerce businesess without these businesses  having a physical presence in those states.

These new rules specifically hit the e-commerce platforms such as Amazon and E-Bay, as these platforms will have to collect the sales tax from the actual sellers on their respective platforms.

Recently, for example Colorado, West-Virginia and California, have introduced new rules according to which all online retailers have to collect and remit all the state and local sales taxes due and “level the playing field between our brick and mortar businesses”.

European Union – Study on VAT fraud

The VAT gap is the difference between the expected VAT income and the actual income for a government. The European Union has been focusing on this VAT gap for several years now since it is valued in the multiple billions (EUR 150 billion in 2016 according to the VAT gap report 2018) and has a direct impact on Member States’ budgets and the European Union budget

The European Union has published a new study on VAT fraud in the European Union.

The study concludes that “while the European Commission has put a considerable amount of work into the modernisation of the EU VAT system, the remaining risks of fraud cannot be ignored”. Furthermore, the study recommends that a different approach and the use of new technologies should be utilized by the EU Member States, to remove significant obstacles that currently impede an effective fight against VAT fraud.

With countries implementing more and more rules such as SAF-T, e-invoicing and real-time reporting requirements, it seems that at least some EU member states are already actively trying to better contain this issue.


Deloitte’s ‘CFO guide to Cloud services’

Cloud computing represents a fundamental shift in how technology solutions are developed and delivered. The Deloitte guide is intended to help corporations make more effective decisions relating to the investment in cloud technology, with a focus on  how finance can benefit from cloud solutions. More and more finance solutions, including core ERP solutions such as SAP and Oracle, are moving from on-premise installation to the Cloud. Working in the Cloud brings many benefits and increases real-time collaboration, efficient updates and brings global visibility. This guide summarizes the key questions and answers on how Cloud solutions can make the finance function more agile.

VATBox has been  a pioneer in bringing a Cloud solution to the area of VAT/GST recovery revealing insight in the full end-to-end process of VAT recovery and providing businesses full visibility and the ability to act and improve processes on the basis of the insight created by our solution. VATBox set the new standard and many Fortune 500 companies already benefited from our solution in order to increase compliance and their VAT/GST refunds.

Contact us to learn how you can leverage VATBox Cloud services for your business.

Dutch National VAT Conference

VATBox is the proud sponsor of the 2019 Dutch ‘National VAT Conference’. The event will take place on the 6th of June in Maarssen, The Netherlands.

It will be a full day on national, international and  indirect tax topics with a combination of plenary and breakout sessions on a variety of (indirect tax related) topics. Amongst the speakers are representatives of the Dutch tax authorities, advisors, scholars and businesses. The conference language is Dutch.

For more information and event website click here.

For a limited time only, VATBox can offer it subscribers a discount of 20% on the conference fee. The discount applies only when using this link.

See you in two weeks!


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