TaxTech – Jan 21 st, 2020

European Union – VAT rates for electronic services as of 1 January 2021

The European Commission has opened a web portal where EU counties can publish the VAT rates applicable to telecommunication, broadcasting and electronically supplied services which are subject to the mini-one-stop-shop (MOSS) reporting regime.

On 1 January 2021, the scope of the MOSS regime will be expanded to include distance sales of goods and other B2C supplies of services. Given that a wider scope of goods and services will be reported through the MOSS, the information provided on the web portal will be expanded accordingly from 1 January 2021.

The EU Implementing regulation can be found HERE. The web portal with the VAT rates can be found HERE.

The Netherlands – Universities introducing courses on Tax & Technology

The rise of legal technology is rapidly changing the way tax law is approached for businesses but now also for tax law students. Three Dutch Universities combined forces and introduced a new course Tax & Technology that aims to explore these technological trends and their tax related transformations. By bridging the gap between tax and technology, the students are prepared for the legal technology era. One of the lecturer’s, Professor Albert Bomer, published a blog discussing his view on real-time data collection.

The blog can be found HERE.

China – Tax authorities use Artificial Intelligence to fight tax fraud

Technology can help businesses to perform tax compliance duties more efficiently, making fewer errors and processing more data in a shorter time. However, tax authorities are gearing up as well in the tax technology arena.

China is one of the countries that is looking into the possibilities to use artificial intelligence to fight tax fraud. Chinese scientists have been working on a system that, they claim, would make it almost impossible to cheat on taxes.

More information can be found HERE.

Africa – Fighting VAT fraud in developing countries

Tax authorities worldwide are trying to fight VAT fraud with the knowledge and tools they have. However, they can only do this effectively if the rules and policies laid down by the government are allowing and helping them with that.

Rita de la Feria of the University of Leeds and Anculien Schoeman of the University of Pretoria have written an article about the necessary mutual dependence that exists between tax policy and administration.

The starting point is a case-study of VAT fraud in African countries, where this phenomenon is thought to be commonplace, to consider the range of anti-VAT fraud measures that have been installed in those developing contexts.

It’s a very interesting article, which can be found HERE.

Thailand – Blockchain as a tool for VAT refunds

Blockchain is something that has been buzzing around for some time now, and tax authorities seem to be picking it up. For bad or for worse, that is yet to be seen, but at least in Thailand, there are developments where blockchain would make the refund of VAT to foreigners somewhat easier.

The blockchain technology for VAT refunds will shorten the process in the document verification, as details of the purchases made by tourists at the shops will be shared in real-time with the Thailand Revenue Department and the Customs Department. Tourists will only need to show their passports when they purchase something, and subsequently, they will receive the VAT refund on their credit card or bank account.

Sound too good to be true, or is this the future? The news article can be found HERE.

United States – Why are these Europeans levying a Digital Services Tax?

It is hard to miss: The United States is not happy with European countries implementing a Digital Services Tax, which, according to the USA, is only meant to tax US companies. The USA is threatening to increase US customs tariffs, but so far, countries such as France are not giving in.

On the contrary, France’s minister of economy and finance again disputed the determination by the office of the US Trade Representative (USTR) that the DST discriminated against US companies, and he said the stiff retaliatory tariffs that the US has threatened to impose on French goods including wine, cheese, and luxury handbags would be “ineffective.”

An article on this can be found HERE.

France is not the only country that is implementing a DST: Italy also implemented new rules as of 1 January 2020. The Italian DST is levied from companies that are providing “advertising on a digital interface targeted to users of the same interface, digital multilateral interface aimed at allowing users to interact (also to facilitate the direct exchange of good and services), and transmission of data collected from users and generated by the use of a digital interface.

Even with the remarks from the French minister in mind, effectively these rules seem to aim at companies such as Amazon, Facebook and other large, US, companies.

A summary of the Italian rules can be found HERE.

United States – Technology developments in State and local taxes by KPMG

The Wayfair-decision created quite some ripples in the area of (electronic) transactions into US States. Also, other technological developments have changed the state and local tax landscape.

KPMG published a report in which the US State and local tax developments concerning technology-related tax issues are described. The report includes updates in table format and covers topics such as access to web-based services, guidance on digital equivalents, taxability of software, and other items.

The report can be found HERE.

Global – How to effectively and efficiently access tax data by KPMG

KPMG published the results of a study on how tax organisations are addressing their data access and quality issues. The main conclusion is that there is not one single solution that can be applied to all companies.

Nevertheless, there is plenty that tax departments can do to ensure that all the tax-relevant data in a company is effectively and efficiently managed. New technologies offer tax professionals a host of options for managing data. Some simple steps can help overwhelmed tax leaders better understand the factors to make tax data management choices relative to their needs.

The report can be found HERE.

Global – Collecting VAT in the Digital Age

The VAT rules in many countries are trying to keep up with technological and economic developments and that is not always simple. Companies are finding different ways to connect with (potential) customers, and were in the past there was a clear difference between goods and services, this line now seems to get dimmer.

Traditionally, a consumer would purchase from a local store. Now their first port of call is more often a website of that store, an online supplier in the case of digital goods, a seller based in another country or increasingly a digital platform through which many suppliers perform sales. This makes it much more difficult for tax authorities to be able to track the full supply chain.

This resulted in international organisations, such as the OECD and the European Commission, to develop new guidelines and rules. We found an article that summarises the latest developments and shines a light on the possibilities for governments, authorities and businesses to ensure a correct VAT collection.

The article can be found HERE.

VATBox Thought leadership series:

Tune in to 1:1 conversation between industry experts Remco Dewaerheijt, VATBox’s VP Tax & Product Strategy and Bas de Koning, EME Indirect Tax Manager at Bayer Crop Science as they discuss VAT, tax technology and the future role of the VAT specialist.

The full interview and podcast can be found HERE.


See you in two weeks!

The VATBox Tax Knowledge team


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