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TaxTech –July 07th, 2020

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[Joint Webinar with SAP Concur] The Present is the Future: Compliance in the “New Normal” of Business Expense Management

In an ever-changing financial landscape with plenty of predictions of a ‘New Normal’, how will finance departments be able to leverage technology to enable businesses to continue operating seamlessly?

And how will they succeed in being a cash-flow generator for their organisations?

You are invited to join our webinar made in collaboration with SAP Concur; The Present is the Future: Compliance in the “New Normal” of Business Expense Management.

Take a look at how trends in employee-initiated travel & expense spend have changed in previous months, and how financial leaders attitudes have shifted to adopting technology; now shaping the future of business’ tech stacks around the world.

In this webinar, we will discuss:

  • Travel & Expense today
  • The rise of P-cards
  • A fully digital end-to-end solution
  • The immediate cash flow opportunity
  • The utilisation of travel & expense technology in 2020

Speakers:

  • Martin Leonard – EMEA Partnerships Director at SAP Concur
  • Steven Ibinson – Sales Director Europe at VATBox

When: Thursday, 16th July 10:30 AM BST (11:30 AM CEST)

Register today and discover what is the “New Normal” on Travel & Expenses and how financial leaders are finding solutions in tax transformation.

Towards greater collaboration: The evolving partnership between business taxpayers and tax authorities

The overarching objectives of most tax administrations are to ensure compliance with tax laws and to facilitate taxpayers’ experiences on their journey to comply. In recent years, with an increasing emphasis on corporate governance, financial/public disclosures and evolving accounting standards, authorities have stepped up their efforts to improve relationships with taxpayers, collaborating with companies to uncover any tax uncertainties and providing expanded assistance to ease their administrative burden.

Tax authorities have developed more sophisticated risk management tools, a readiness to differentiate between high and low-risk taxpayers and a friendlier audit approach to those classified as low risk. Tax authorities are now moving the relationship towards a true partnership based on honesty, mutual understanding and a willingness by both parties to engage in a constructive dialogue. Doing so is worthwhile. Creating a positive partnership between both parties benefits all involved. It reduces tax uncertainty for the businesses and enables the authorities to concentrate their resources on high-risk issues.

The full article can be found HERE

The effect of COVID-19 on tax departments

The effect of COVID-19 on the economy and the behaviour of people is huge. It will take time to adjust to the ‘new normal’ for companies and individuals. People will want to work more from home, business models must be adjusted to meet customer’s needs and requirements, and cash-flow planning is more important than ever.

Tax departments will also have to adjust and in some cases, this is the right time to reform the tax department and to re-focus. In an article written by two EY partners, the need to change and the way forward are described in more detail. “Before the pandemic, ‘agile’ was the buzz word for businesses and now ‘resilience’ may appear to be the only game in town. What do agility and resilience mean for the tax function?”

This question and more are answered in the article that can be found HERE.

Click HERE to get the latest COVID-19 VAT and GST updates

Effectively financing tech initiatives: Insights In-Depth: Tech Trends 2020

Listen to Deloitte’s podcast on how growing the value of the company can be achieved through technology, as IT and Finance leaders are increasingly working together to operate with speed and agility. Tanya Ott from Deloitte talks with Scott Buchholz, Khalid Kark, and Brijesh Ammanath of Barclays about effectively financing tech initiatives.
The full podcast can be found HERE.

Temporary VAT rate changes result in headaches for businesses

Many governments are introducing temporary reductions in VAT rates. It seems a nice gesture and a concrete tool to reduce the economic impact of the corona-crisis.

However, with each change in a VAT rate, businesses must adjust their systems, renew reporting tools, re-instruct the AP departments, etc. This impacts the orders processed, payments and AP & AR invoices that are issued on or around the date of the change.

Governments may sometimes forget that VAT rules impact how compliance is managed by businesses. An article about the headaches caused due to rate changes can be found HERE.

European Union

European Council agrees on the postponement of e-commerce VAT and DAC6 rules

The DAC6 rules were set to come into effect on July 1, 2020. These rules include the requirement for companies to report on certain cross-border arrangements and transactions.

The Council of the European Union (EU) announced on June 24, 2020, that the EU would give Member States the option to delay by up to six months the deadlines for filing and exchanging information under the EU mandatory disclosure rules (MDR) and the common reporting standard (CRS).

The EU Member States that have already made announcements or have published draft laws in this respect include:

  • Belgium, the Czech Republic, Luxembourg, and the UK: will opt for the full six-month deferral.
  • Ireland and Sweden: deferral confirmed but intended timeframe to be announced.
  • Finland: will not opt for a deferral.

An overview can be found HERE.

On the same date, the Council of the European Union adopted a proposal by the European Commission to delay the entry into force of the 2021 e-commerce VAT package by six months. These rules will apply as of July 1, 2021, instead of January 1, 2021.

The delay will give the EU Members States more time to implement and comply with the rules on cross-border information reporting and exchanges.

More information about these decisions by the European Council can be found HERE.

Bulgaria – Clarification on the reduced VAT rate

The Bulgarian tax authorities issued a ruling on the application of the reduced VAT rate (9%) for certain goods and services. The reduced VAT rate is a temporary measure and applies July 1, 2020 to December 31, 2021.

The reduced rate applies to restaurant and catering services. The clarification gives examples of supplies that will be covered by this. For example, the restaurant services where food is consumed in a restaurant falls under the reduced rate. On the other hand, delivery of food (prepared or unprepared) without ancillary services is still subject to the standard VAT rate of 20%.

More information can be found HERE.

Cyprus – VAT rate decrease now effective

Cyprus announced a temporary VAT rate decrease from 9% to 5% for the period July 1, 2020 to January 10, 2021. It has now announced transitional rules that will apply.

The summarised, transitional rules are as follows:

  • All transactions effected before July 1, 2020 are subject to VAT at the rate of 9%,
  • Any transactions that take place after the change in the VAT rate will be subject to VAT at the rate of 5%.

More information can be found HERE.

Denmark – Proposal to continue to apply a flat-rate scheme for the private use of business cars

The European Commission published a proposal to allow Denmark to continue using the flat-rate scheme for the private use of business cars. The scheme allows a deduction of input VAT paid on the purchase and use of a car, using a specific flat rate.

If a business can register its vehicle for business purposes, it will be authorised to deduct in full the VAT on the purchase of the vehicle as well as the running costs. However, a business which registers a vehicle as being both for business and personal use is not authorised to deduct the VAT on the purchase cost but can deduct in full the VAT on the running costs of the vehicle.

Some other EU countries have specific rules for the recovery of VAT on cars, e.g. the Netherlands and Belgium. This proposal is an example of these different rules and interpretations by the Member States.

The proposal can be found HERE.

Hungary – New online invoice reporting system and 3-month sanction-free initiative

Hungary is one of the countries where businesses must report and share their invoices on an almost daily basis with the tax authorities. The Hungarian tax authorities published an official statement regarding the data reporting obligations applicable as of July 1, 2020.

The tax authorities state that, provided certain conditions are met, no default penalty could be expected from July ,1 2020 to September 30, 2020 concerning the online invoice data reporting obligations.

More information can be found HERE.

Italy – Proposal to extend the split payment mechanism

The European Commission published a proposal, allowing Italy to extend the split-payment mechanism.

The first request from Italy dates to 2014. At that stage, Italy wanted to implement a split payment mechanism for B2G transactions only, i.e. for supplies to public authorities, the VAT due would no longer be paid to the supplier, but to a separate and blocked bank account of the tax authorities.

Reports in 2018 showed that the split payment measure introduced in Italy increased VAT revenues and this increase was higher than the estimates made at the time of the introduction of the measure.

In the proposal, the application of the split payment regime is extended to June 30, 2023.

The proposal can be found HERE.

Lithuania and Serbia– Deadline extension for 13th Directive VAT refund requests

Following countries such as France, the Lithuanian and the Serbian tax authorities announced that the deadline for submitting 13th Directive VAT refund requests would be extended from June 30 to September 30, 2020.

Other countries that apply less strict rules are Germany and Slovakia, who have granted some easements and provisions on late submissions. The Czech Republic allowed for electronic submissions, instead of requiring the non-EU business to submit all hard-copy original invoices and documents.

More information on the rules in Lithuania can be found HERE.

More information on the rules in Serbia can be found HERE.

Both sources are in the national language. Should you have any questions about the VAT refund procedure and the extension of the deadlines in these (or other) countries, please feel free to contact us.

Poland – New VAT rate matrix in effect as of July 1, 2020

As of July 1, 2020, Poland is introducing a new VAT rate matrix which will change the classification of goods and services for VAT purposes. The change is aimed to simplify the VAT rate system in Poland and make it easier for taxpayers to determine what rate to apply.

Until now, taxpayers must check if the supply of goods or services is subject to the reduced VAT rate by looking-up the Polish Classification of Goods and Services (PKWiU) code.

In in the new matrix, this is still the case for services, but for goods, it will be allowed to use the classification according to the Combined Nomenclature (CN).

More information can be found HERE.

Asia-Pacific

Vietnam – E-invoicing obligation as of November 1, 2020

Vietnamese businesses have had two years to get used to e-invoicing. As of November 1, 2020, e-invoicing will be mandatory in Vietnam.

The background of the new rules is the aim of the Vietnamese government to advance digitalisation and make e-invoicing a common practice in the public and private sector. The mandatory e-invoicing will also increase business competitiveness and make it easier to combat tax fraud.

As of November 1, 2020, organisations, companies and individuals that provide goods or services will be required to issue e-invoices, invoices printed by the taxpayers, pre-printed invoices and invoices purchased from the tax authority will no longer be valid. The Vietnamese e-invoicing obligation is another milestone in the worldwide digitised tax revolution.

More information can be found HERE.

 

See you in two weeks!

Remco Dewaerheijt

On behalf of the

VATBox Tax Knowledge team

taxknowledge@vatbox.com

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