TaxTech – July 23th, 2019
Philippines – Certificate for VAT refunds
In many countries, a business that is in a VAT refund position, automatically receives this VAT, or it can request for a refund of the excess of input VAT. The tax authorities will often perform a check before they actually refund the money, especially to see if the VAT refund is in line with the business activities and the transactions that have been reported in the past.
In the Philippines it will now be necessary to provide evidence to the tax authorities that the business does not have outstanding tax liabilities. For this purpose, the tax authorities will issue “Delinquency Verification Certificates” to taxpayers. The tax authorities will only issue a certificate if certain criteria are met.
European Union – Importation of low value parcels
As of January 1, 2021, it will be possible to declare goods up to EUR 150 using a simplified customs declaration that requires 3 times less data than a standard declaration. An amendment to the Community Customs Code has been published by the European Commission for this purpose.
Right now, consignments of goods into the EU that are worth less than EUR 22 are exempt from VAT. This measure, also known as Low Value Consignment Relief (LVCR), will cease to exist starting January 1, 2021. As of that date, all imports into the EU will have to be declared using an electronic customs declaration.
United States vs Europe – Digital Services Tax keeps the minds busy
In many countries around the world, a Digital Services Tax (‘DST’) is coming into existence. This ‘new’ tax has been a point of discussions between the OECD countries for some time.
Most recently, the discussions have flared up again when the United States announced its disapproval of the plans of France and the UK to levy a DST. Nevertheless, finance ministers and central bank governors from the Group of Seven (G7) leading industrial nations agreed to endorse the direction of an international consensus project on digital taxation being undertaken by the OECD.
France introduced a DST of three percent with retroactive effect from 1 January 2019, which will impact a number of large US technology companies. The UK also recently unveiled a refined version of a two percent DST, with a proposed effective date of April 2020. Most recently, Spain announced that it will also implement a DST.
Even though the United States do not like the idea of a DST, it seems that there will be much more countries to come with a similar taxation system.
Argentina – VAT on E-commerce activities
All over the world, tax authorities are trying to ensure that no VAT is ‘lost’ on E-commerce transactions.
In Argentina, new rules have been announced, which will oblige E-commerce businesses to charge and pay Argentinian VAT on their sales into Argentina. A mechanism for paying VAT on digital services and a list of foreign providers were published.
Under the new rules, VAT applies to digital services provided by foreign entities to Argentine end-consumers (B2C or business-to-consumer transactions). B2B (business-to-business) transactions were already subject to the VAT (through a mechanism known as “import of services”).
Ireland – Additional VAT registration for EU trade
If a business has taxable activities in an EU country, it usually must register with the tax authorities in that country. In most countries, a business then automatically receives a domestic VAT registration number. However, this VAT number is not always automatically also an ‘EU VAT identification number’.
Such an EU VAT identification number is necessary for businesses that trade with companies in other EU countries. If a business is or will be involved in EU trade, it will therefore have to ensure that it will have an EU VAT identification number.
Ireland is currently developing a two-tier VAT registration system whereby Irish businesses can apply for a ‘domestic-only’ registration or an ‘intra-EU’ registration. This change will apply only to persons applying for a VAT registration after 17 June 2019.
Ireland is not unique with this set up. Other countries, such as Germany, have a similar rule, where a local business automatically receives a ‘tax number’, but will have to apply for a separate EU VAT identification number if it expects to have intra-Community activities as well.
Businesses in Ireland will have to ensure that they apply on time for an intra-EU VAT registration number, since not having an EUVAT identification number may result in foreign vendors to charge foreign VAT.
Jordan – New VAT invoicing requirements
Jordan implemented new VAT invoicing requirements as of 2 June 2019. The new Regulations contain the invoicing requirements which must be implemented by a seller when a supply of goods or services is made.
Invoices can be issued on paper or in electronic format. Invoices can be issued in foreign languages and currencies. Invoices that do not have a signature or stamp should still be considered valid, unless the Income and Sales Tax Department specifies otherwise.
Businesses should review their invoicing practices and the effect of the Regulations to ensure they meet these new invoicing requirements. Failing to do so may result in penalties.
European Union – Submit your 2018 EU VAT refund applications – It’s not too late… yet
September 30, 2019, will be the last possible date to submit your EU VAT refund requests for 2018 expenses.
Claims can be submitted for foreign EU VAT on regular travel expenses such as hotels, car rental and meals(1), as well as for Accounts Payable invoices, which may easily carry up to thousands of Euros in foreign VAT for intercompany meetings, intercompany recharges, trade fairs, tooling, customer events… you name it.
Check this article ‘what you need to do to secure your companies’ 2018 EU VAT refunds before going on that well-deserved Summer holiday.
Romania – Reduction of VAT rate
The Romanian Senate has received a legislative proposal which states the intention to reduce the standard VAT rate in 2020 from 19% to 16%. If this proposal is accepted, Romania will become the country with the lowest standard VAT rate in the EU. In addition, a 5% low rate for food would also be introduced.
According to the latest report from the European Commission, which shows the evolution of the VAT Gap in all EU member states from 2012 to 2016, Romania ranked last on all those years. Therefore, this measure of lowering VAT rate to 16% aims to improve VAT compliance rates and collection.
A nice read when you’re on vacation.
Survey: The impact of VAT Digitalisation on the future role of tax managers
We are in the midst of 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: https://vatdigitalisation.typeform.com
Remember, we value your privacy; the survey responses are anonymous.
Thought leadership – Business risk assessment and management
Social media and the 24-hour news cycle are putting businesses at risk as “hype” distracts from the more serious threats to businesses. Business risk assessment and management is being impacted by “Black swans”; attention-grabbing issues that are not easy to predict.
BDO prepared the Global Risk Landscape 2019 report and regional risk White Papers, providing insight to how businesses deal with risks. Click HERE to download the report.
See you in two weeks!
Remco Dewaerheijt – VP Tax & Product Strategy