TaxTech – August 06th, 2019
European Union – Overview upcoming VAT rate changes
Countries are changing their VAT rates or the scope of the rates fairly often. The European Union provides an overview of the current applicable VAT rates within the EU twice per year. However, rates changes or debates on future changes take place also in the course of the year, and as a business, you want to ensure that you are aware of what is coming or has changed on an ongoing basis.
Based on the recent announcements and publications, an overview of the upcoming EU VAT rate changes was put together. You can find the overview HERE.
South Africa – Tax penalties for foreign companies that provide e-services
From 1 April 2019, the VAT base in South Africa has been broadened to include foreign businesses that supply electronic services to consumers in South Africa, where certain conditions are met. THIS publication identifies the scope of this new VAT liability and considers the potential penalties for non-compliance.
A foreign business providing services to South African resident customers must assess whether it has an obligation to register for VAT in South Africa. Failure to register for VAT in a timely manner would lead to penalties and interest being imposed, and the foreign business (and/or its intermediary) may incur reputational damage that may impact its business.
Poland – Split payments, Domestic reverse charge and more
On 1 November 2019, significant VAT changes will enter into force in Poland. This includes the obligatory split payment mechanism in certain circumstances, the elimination of the domestic reverse charge regime and a new means of classification of goods for VAT purposes.
And as of 2020, the VAT return will be replaced by reporting via a SAF-T file. Is this the end of the VAT return we have known for so many years in Europe?
Bahrain – Manual on modifications to VAT return and non-resident VAT registration
Bahrain is one of the GCC Gulf States that implemented a VAT system recently and where VAT returns are submitted, mistakes can be made.
The Bahrain National Bureau for Revenue (NBR) published a manual on how to report corrections in the VAT return. The manual provides taxable persons in Bahrain with an overview of the process of making adjustments, corrections, and self-amendment to a VAT return.
The manual can be found HERE.
Furthermore, the NBR announced that non-residents without a commercial registration in Bahrain are permitted to register for VAT. THIS article outlines the conditions to be satisfied in registering for VAT and discusses the practical implications of an application for VAT registration on business activities.
United Kingdom – VAT treatment of credit notes
A credit note is a document that adjusts or complements the earlier invoice that has been issued. For VAT purposes, a credit note is thus an important document, and it will always be part of any audit that is being done by the tax authorities.
In the UK, the new VAT Regulations 2019 announced some changes to the VAT treatment of credit notes as from 1 September 2019. The changes mainly look at limiting reductions in VAT output tax to situations where cash has been repaid to customers. The changes also prescribe the content of credit notes (including referral to the original invoice) and set out time limits for them to be issued (within 14 days).
Every business that issues credit notes will be affected by these amended rules. The UK tax authorities will publish a guide, providing more detail on the practical issues that these changes may cause.
France – Digital versions of invoices allowed
Taxpayers are now allowed to prove expense receipts using a computerised version of the receipts for purposes of determining the tax base for tax and social security contributions, as of 1 July 2019. Of course, the integrity and authenticity of the documents must be preserved.
Particular attention must be paid to the quality of digitisation because the conditions are very strict and not all currently available solutions meet these criteria. For example, a company that asks its employees simply to take a picture or image of their expense receipts would not meet the conditions and would have to continue to keep paper documents. But like many other countries, France is also recognising the value of the digitisation of (business) work flows and is step by step aligning to that. After all, minimising the administrative burden for businesses will stimulate growth.
European Union – No more ‘domestic sales’ as a sale for export
Not only VAT but also customs rules change regularly and they may have an impact on various types of transactions, in multiple countries.
In 2018, the European Commission’s Customs Expert Group (CEG) decided to abolish the “domestic sale” concept. The domestic sale principle precludes sales transactions where both the buyer and seller are established in the EU from being regarded as a sale for export.
The abolition of the concept may have an impact on the customs valuation of goods for transactions between EU-established parties.
An overview of the concept, the implementation in the various EU countries, and the implications for businesses, can be found HERE.
United Kingdom – Brexit: No Deal and reducing VAT?
Mr Boris Johnson is the leader of the Tory party and Prime Minister of the United Kingdom, after being elected into the position in July 2019. He has repeatedly said that he’s not afraid of a No Deal Brexit on 31 October 2019. But he’s said more.
His main economic policy is to ditch any austerity measures and has made numerous spending promises, mainly on infrastructure, saying he would borrow the money to fund various projects, including rolling out broadband in rural areas and greenlighting Northern Powerhouse Rail.
Johnson has also promised to slash VAT and make fewer people pay National Insurance to help low-paid workers. Actions could include lowering VAT rates and raising the National Insurance threshold for lowest earners.
It will be interesting to follow the developments in the coming months and in any case: if you hadn’t started thinking about the Brexit and the consequences for your organisation yet, you better start doing so, as after 31 October 2019, there should be (significant) changes….or will there be another extension?
Latin America – Tax guide
Latin America is a fast-developing region, and notorious for its complicated VAT rules. On the other hand, countries such as Brazil also have very modern rules for dealing with VAT compliance, with advanced technological possibilities and requirements and the rapid increase of digitalisation of administrative processes.
The free Latin America Tax Guide 2019/20 provides an overview of the taxation and business regulation regime of Latin America’s most significant trading countries. Countries covered in this guide include Argentina, Brazil, Mexico, Uruguay, and Venezuela.
European Union – E-commerce is still an area where improvements can be made
The European Court of Auditors (ECA) finds that many challenges in collecting correct amounts of VAT and customs duties on e-commerce remain to be resolved. THIS report provides an overview of the findings of the ECA.
The report was prepared because of the risk of irregularities occurring in the collection of VAT and customs duties in cross-border e-commerce. While there are no estimates available of how much VAT has not been collected on cross-border supplies of services, the Commission estimates losses on supplies of low-value goods from non-EU countries to be as high as €5 billion per year.
The ECA found that despite recent positive developments the EU is not addressing all the challenges in collecting the correct amounts of VAT and customs duties for goods and services traded over the internet. For example, controls carried out by national tax authorities are weak and those of the Commission are insufficient, and there are weaknesses in the current customs clearance systems and that there is a risk that the EU cannot prevent abuse by the intermediaries involved.
The good news is that the ECA also finds that the European Commission is going in the right direction.
Seven examples of how digital transformation impacted business performance
Many companies are hesitant to invest in digital transformation without knowing if the investment will pay off. However, when done strategically, digital transformation can improve stock prices and revenue in the long run.
THESE seven major companies show that changes might not occur overnight, but investing in digital transformation can make a large financial impact over time.
A new partnership between VATBox and BCD Travel
Learn about VATBox and BCD new partnership designed to increase the value we bring to businesses, by providing our joint clients with the reporting, analytics and business intelligence they need to optimise their processes.
Roderick De Greef Managing Director EMEA North & West at VATBox added that “This partnership is an important element in VATBox’s broader collaboration with travel market leaders, aimed at optimising our platform for organisations globally.”
Marcel de Wit VP Tax and Treasury at BCD Travel stated, ”VATBox has allowed the company to automate and optimise its own and its customers’ VAT reclaim processes, improve invoice compliance and make the traveller’s life easier”.
For more information, click HERE.
Last chance to participate in the VAT digitalisation survey
Survey: The impact of VAT Digitalisation on the future role of tax managers
We are amid the digitalisation of VAT and tax. We invite you to explore how digitalisation impacts business and financial strategy and how it affects the future role of tax managers and financial leaders.
By participating in our survey, you’ll get early access to the in-depth survey’s results. Learn from your peers and see how your VAT organisation performs against the benchmark.
The survey can be found here: http://bit.ly/30Idq7I
Remember, we value your privacy; the survey responses are anonymous.
Tax Technology – Big Data: But what do you do with it?
The amount of data available to organisations every day continues to proliferate at a staggering volume but technologies such as analytics and artificial intelligence (AI) have the potential to help businesses make better use of these massive volumes of data.
However not every organisation is optimising the opportunities available. Some do little or nothing with data to aid their decision-making. Others carry out analytics projects in pockets of the business. Far fewer consistently embed analysis, data, and evidence-based reasoning into their decision-making process.
THIS article provides insight into how organisations can better manage and use the data they have and obtain.
VAT Refunds – Reminder regarding the September 30th VAT Refund deadline
If your business paid foreign EU VAT in 2018 on Travel & Entertainment expenses or foreign EU VAT through Accounts Payable, this VAT would become a full write-off after September 30, 2019. Before then, thousands of Euros in foreign VAT for intercompany meetings, intercompany recharges, trade fairs, tooling, spare parts, customer events, etc. are, in most cases fully recoverable.
Contact us to discover how we can help you determine eligible expenses, painlessly extract data from your ERP, Travel Expense Systems, and other internal data sources, and ensure compliance with all relevant rules and regulations in the country of refund but hurry if you still want us to do the work while you enjoy a well-deserved cocktail at the pool-side.
We invite you to schedule a demo to learn more about how VATBox uses artificial intelligence and machine learning to optimise your VAT refund position, while at the same time providing you with a broad spectrum of data to benchmark your organisation’s performance.
Don’t delay! September 30, 2019, is the last possible date to submit your EU VAT refunds for 2018 expenses. Read more about the deadline and optimising the audit and refund process in our latest published article.
See you on September 2nd!
Remco Dewaerheijt – VP Tax & Product Strategy