May 21, 2018

TaxTech May 21, 2018

Last week Amazon notified its customers in Europe, Africa and the Middle East that the cloud computing services will start billing VAT per July 1, 2018. Malaysia’s new government announced a GST reduction per June 1st from 6% GST to 0%. Kuwait saw another postponement to their VAT implementation, this time till 2021. The EU released their monthly package of infringement decisions, while closing another 96 cases without the need to pursue further procedure. And last week saw a new report, ranking Ireland still #1 in tax competitiveness and the UK and Luxembourg coming in 2nd and 3rd. Last week saw some additional tax developments including the following:

UK: Updated Notice 702 Imports and VAT. HRMC has updated Notice 702 Imports and VAT, which explains how imported goods are treated for VAT purposes, including how to work out import VAT and which goods are relieved from import VAT. Imports that are over £873 in value now need to be reported on a Single Administrative Document.

Ireland: Release Virtual Currency Tax Guidance. The Irish office of Revenue released eBrief No. 88/18, which gives guidance on the tax treatment of various transactions involving crypto currencies. It sets out the treatment under VAT, PAYE, Income Tax, Corporation Tax and Capital Gains Tax.

Italy: New transfer pricing guidelines. The Ministry of Economy and Finance issued a decree providing transfer pricing guidelines, in compliance with article 110(7) of the Italian income tax law as recently modified to incorporate the “arm’s length principle”. The decree makes express reference to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.

EU: Single EU VAT area. The EU Parliament’s Economic and Monetary affairs Committee has published its draft report regarding the definitive single EU VAT area as proposed by the European Commission. It holds a proposal for amending Directive 2006/112/EC as regards to harmonising and simplifying certain rules in the value added tax system and introducing the definitive system for the taxation of trade between Member States. The  European Council adopted last week a directive strengthening EU rules to prevent money laundering and terrorist financing. Amending directive 2015/849 sets out to close down criminal finance without hindering the normal functioning of payment systems. Access to information on beneficial ownership will be broadened and expanded cooperation between financial intelligence units will be pursued. PDF here.

UAE: Refund VAT. The UAE cabinet announced that firms operating in the exhibitions and conferences sector, as long as they are based outside of the UAE, will be entitled to a refund on the 5% VAT imposed on the provision of services required for setting up these events. The UAE Central Bank started to publish daily exchange rates on its website. Article 69 of Federal Decree-Law No. (8) of 2017 states that where a supply is in a currency other than AED, the amount stated on the tax invoice shall be converted to AED using an exchange rate approved by the Central Bank at the date of supply. As such all businesses should now take action to ensure that they comply with the Central Bank exchange rates with immediate effect.

New methods for VAT Recovery while traveling. As the travel platforms are learning to navigate VAT recovery for their clientele, developments are forthcoming that make the data needed easier to retrieve. With simpler apps and some straightforward number crunching, reducing business travel expenses, and reclaiming VAT from those expenses, has never been easier. Blog here.

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