TaxTech July 16, 2018
After 64 fantastic games, the World Cup 2018 ended last night with France bringing home the Cup. Congrats to France, but what a shame that it is over. If you enjoyed the Word Cup 2018 as much as we did, you might like some nice stats about this tournament. But it was not all about the World Cup last week, there was also some action in the finance industry. The South African Revenue Service published an update on the FAQ’s on the latest VAT rate increase from 14% to 15% which became effective April 1st, 2018. We saw the release of the EU Tax Policy Report, which provides an overview of the primary tax policy developments in the EU in the first semester of 2018. The report, provided by The European Association of Tax Advisers, concentrates on EU developments but also covers OECD and UN changes. Last week we also saw the European finance ministers meeting at Ecofin to discuss again the VAT ‘reverse-charge’ mechanism and the VAT rates for eBooks. No agreement was reached and both proposals will be discussed again in the next meeting that will take place in October. Additional updates and changes from the finance industry from last week are:
Brexit: UK remains in EU VAT regime till Dec 2020. The UK Brexit negotiators and the European Commission have confirmed that the UK will remain in the EU VAT regime until the end of the Brexit transition period. This means that final VAT refunds under the existing 8th Directive must be submitted till March 31, 2021. The joint statement you can find here. The government has also released the 104-page paper setting out their latest negotiation position for Brexit.
UK: VAT notice on Making Tax Digital. HM Revenue & Customs issued a VAT notice on Making Tax Digital, providing information on how businesses with taxable turnover above the VAT registration threshold should keep and preserve digital records and file VAT returns using compatible software.
UAE: VAT refund system for tourists. The UAE Cabinet has adopted a decision to implement the value added tax refund system for tourists, which will integrate between retail outlets with tax refund points in line with the government’s efforts to achieve the efficient implementation of the tax system in the UAE. The system will be implemented beginning the fourth quarter of 2018. Non-resident tourists may refund VAT on purchases made at participating retailers, provided that such goods are not exempt from the tax system, through designated refund outlets. More here.
European Commission: paper on proposal for definitive VAT system. The European Commission has published a working paper containing the text of VAT directive 2006/112/EC as regards the introduction of the detailed technical measures for the operation of the definitive VAT system for the taxation of trade between Member States. The working paper has incorporated the proposed amendments for a definitive VAT system.
Foreign Lessons on Taxing Remote Sales after Wayfair. Does the US Supreme Court’s landmark decision in Wayfair hold any implications for foreign businesses that sell goods to U.S. consumers? What are the implications for direct sales — for example, through an online market places — and what are the implications for the more conventional practice of routing cross-border sales through a U.S.-based importer. Some answers here.
White Paper: EMS Before Your Business Needs an SOS. A robust Expense Management System (EMS) provides the comprehensive data necessary to support an efficient and effective VAT reclaim process, with easy audit trails necessary to satisfy tax authority requests. We have prepared a White Paper that provides detailed data about the difficulties in VAT reclaim, defines how to choose an EMS, describes widespread productivity gains from implementing EMS, and clarifies the true benefits of having a robust EMS for your business. White Paper here.
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