TaxTech – June 12th, 2019
Canada – Cryptocurrencies
Cryptocurrency, such as Bitcoin, is considered as a substitute for real money but also has value in real money. Although cryptocurrency is not fully regulated and has not obtained a legal tender status in many countries, authorities have considered its significance and implemented specific tax treatments.
Canada released draft legislative proposals that will impact those who transact with cryptocurrency. The proposals will add cryptocurrencies to the definition of “financial instrument” for GST / HST purposes. As a result, supplies of cryptocurrency, defined as a “virtual payment instrument” in the GST / HST legislation, will be exempt or zero-rated. The proposals do not address considerations specific to miners of cryptocurrency.
Canada is not the first country looking at cryptocurrency. For example, South Africa and Germany defined cryptocurrency also as financial instruments, placing them in the same category as loans, debts and common stocks.
United Kingdom – Let’s discuss Brexit….again…
The fact that the Brexit has been delayed until 31 October 2019 does not mean that all went quiet on this topic.
It was announced first that the Withdrawal Agreement Bill would be introduced in the UK Parliament, but then it was announced it wouldn’t. Theresa May stepped down as Conservative Party leader on June 7. The Conservative and Labour parties did poorly in the European Parliament elections on 23-26 May. Meanwhile, on the mainland, the EU maintains its position that there will be no renegotiation of the November 2018 Withdrawal Agreement.
Both the UK and the EU will shortly be appointing new leaders. However it is likely that whoever takes over in the UK and the EU institutions will face the same Brexit scenarios as before: the UK leaves based on the 2018 Withdrawal Agreement, or revokes Article 50 and stays in the EU, or leaves without a deal on 31 October 2019.
The UK parliament published a document in which it describes the scenario where there will be no deal. It describes the specific measurements that have been announced by the 27 other EU countries. The document can be helpful for companies to prepare for 1 November 2019: Deal or no deal, that is the question. Again…
New Zealand – E-commerce
As in many other countries around the world, New Zealand is now also starting to look at taxing the digital economy. The New Zealand Government has released a discussion document on the design of a possible Digital Services Tax (DST), and it is considering DST at a flat rate of 2% to 3%.
Besides a potential DST, the GST rules will also change. Non-resident retailers selling to New Zealand consumers will be required to register for and charge New Zealand GST from 1 December 2019. The new rules will apply to offshore suppliers who make supplies (or expect to make) supplies of “distantly taxable goods” to New Zealand end consumers of NZD 60,000 or more in a 12-month period. Electronic marketplaces and re-deliverers also have a requirement to register and comply with the new rules.
European VAT Committee – Comments on Quick fixes and overview ECJ case law
The European VAT Committee had its 113th meeting on 3 June 2019. As a result of this meeting, the VAT Committee published its Working Paper nr. 968, with its views on the quick fixes package.
The Working Paper includes comments on how companies must deal with small losses in call-off stock situations, but also the question if a call-off stock warehouse can be considered a fixed establishment of the supplier. Furthermore, the Committee provides its views on triangular transactions and the meaning of the term ‘independent’ regarding proof of transport.
A specific remark is made regarding the exemption of an intra-Community supply of goods and interaction with the VAT Refund Directive. One of the requirements for an intra-Community supply is that the supplier must always have the VAT ID number of the customer. Without this VAT ID number, the supplier must charge local VAT.
According to the VAT Committee, when the supplier has invoiced VAT on an intra-Community supply of goods, if the acquirer has not provided their VAT identification number, and there is no possibility for a correction of that invoice afterwards, or the correction of the invoice becomes excessively difficult, then Member States should allow recovery of this VAT by the customer through the EU VAT refund procedure.
European Union – VAT Refunds
Claiming VAT Refund can be a time-consuming, tedious job. Firstly, the rules for the eligibility for VAT refunds are not the same in all countries, and not always clear. For example, a German court has asked the European Court of Justice whether an indication of a reference number on the invoice, instead of the actual invoice number, is sufficient to submit with the EU refund application, while suggesting that the principle of neutrality and the principle of proportionality would indicate that this classification information would be sufficient.
Some shops try to make it easier to claim back VAT for tourists. For example, the French shop “Galeries Lafayette” in Paris streamlined the VAT Refund process for tourists by implementing a high-tech VAT-ATM within the store that will refund the VAT on purchase instantly
European Court of Justice
The European Court of Justice has recently confirmed again that Member States cannot make it unnecessarily difficult for a non-resident business to claim back VAT. Specifically, a late response to a request of information from the VAT authorities cannot affect the rights of the taxable persons to regularize their situation with the competent national authorities.
VATBox is happy to assist you in streamlining your VAT refund process. Please contact us for more information.
Empowering women in tax
With a career in accounting and finance behind her, Joan Amble now serves on multiple corporate boards and works with an organisation she co-founded that mentors and coaches promising mid-career women.
“With such varied experience and a passion for helping women develop professionally, I knew that I had to sit down and speak with Joan for my Mind the Gap blog.”
HERE is the link to a series of three videos featuring Laura Hay from KPMG and Joan Amble.
How tax is transforming in the digital age?
As countries move toward digitalising their tax administration, their efforts can often follow a similar pattern. Of course, the move to digitalisation is not necessarily linear, nor should higher levels of digitalisation be viewed as the ultimate goal of either taxpayers or tax authorities. HERE is the link to the EY article covering challenges and opportunities businesses should consider.
Taking the time to understand these issues and explore forward-looking solutions today, and conveying these options to policymakers may help avoid more costly and time-consuming remedies tomorrow.
Meet us at SAP Concur London June 18&19
SAP Concur Fusion EMEA is a conference that brings together the entire community on the SAP Concur network and customers. As a leading SAP Concur, partner and sponsor, we would love to meet you there to help you streamline your VAT related transactions across all your entities and jurisdictions, and provide you with the insights in your refund data you have today.
The event will take place in London on June 18 and 19, 2019.
Contact us to schedule a meeting.
See you in two weeks!
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