Countries are constantly motivated to make their tax processes more transparent and less cumbersome.
To this effect, Spain has introduced the Directive on Administrative Cooperation (DA7).
This will help to facilitate the exchange of information on income generated by sellers on digital platforms.
Authorities can confirm when tax should be paid, but the automating of the process will result in less of an administrative burden on digital platforms.
The National Forum for Electronic Invoicing and Electronic Public Procurement (FNFE-MPE) and the Forum Elektronische Rechnung Deutschland (FeRD) have published an updated version of the Factur-X 1.0.06/ZuGFeRD 2.2.
Technically, these are identical hybrid formats (PDF invoices with embedded XML). Therefore, the technical specifications are now combined in one uniform document, and are available in English, German and French.
The links can be found as follows:
https://fnfe-mpe.org/factur-x/factur-x-et-zugferd-2-2/
https://fnfe-mpe.org/factur-x
The past 2 years have demonstrated a direct correlation between significant world events and the fiscal measures countries enact. This has been particularly notable with the coronavirus pandemic but is also becoming more apparent with recent events in Ukraine.
We’ve previously seen countries such as Romania taking measures to ensure that all goods and services provided to persons affected by the war will not be subject to VAT.
Poland is adopting multiple similar measures. The Polish National foundation of Tax Advisors has stressed that no public associations will benefit from any tax relief on aid from Ukraine.
Poland is also considering the revision of a current decree, which would mean a 0% VAT rate would be applied to free-of charge deliveries of goods (or a supply of services) which would be aimed at assisting victims of Ukraine’s armed conflict.
This would affect all deliveries / supplies made between 24 February 2022 and 30 June 2022, if approved by the Polish Parliament.
We can expect to see many countries adopting similar measures, particularly bordering countries in close proximity to the conflict.
The Polish Ministry of Finance has permitted the taxation of any financial services that businesses provide from 1st January 2022.
The main effect of this is that many businesses will be able to deduct VAT from goods / services purchased, thus providing a financial benefit. Taxation of financial services is optional rather than mandatory.
Financial services for retail clients are still exempt- meaning that any consumers should not see an increase in prices.
As part of the Gulf Cooperation Council (GCC) agreement signed in 2016, the GCC member states agreed to a harmonized value-added tax framework. The Kuwaiti government initially planned to adopt the VAT system by 2021 but delayed the date to 2023. A further postponement could, however, be possible in view of the rising oil price and high inflation in the country.
Instead of the VAT system, the Government is pursuing the idea of implementing a selective taxation, which will apply on tobacco and related products, soft and sweetened drinks, luxury goods such as watches, jewellery, and precious stones as well as cars and yachts. The selective tax rate will range from 10 to 25% and is estimated to bring approximately 500 million dinars annually for the government when implemented.
In March 2022, the goods and services tax (GST) revenue collected was ₹1.42 lakh crore ($18.93Bn), the highest amount since the new taxation system was implemented in India. Ministry of finance said in a statement that GST revenues for March 2022 are 15% higher than the same month last year and 46% higher than March 2020. These results show how powerful Continuous Transaction Controls (CTC) can be from a tax collection perspective.
Together with economic recovery, anti-evasion activities, especially action against fake billers have contributed to the enhanced GST, said the government.
The National Bureau for Revenue’s (NBR) of Bahrain has introduced the “Digital Stamps” Scheme in line with its commitment to ensure the effective implementation of Excise, with the aim of tracking excise goods from the manufacturing stage to the point of consumption. As stated by NBR, the scheme will be implemented in phases:
• From 15 May 2022, all imported cigarette products that arrive in the Kingdom must have a digital stamp
• From 14 August 2022, cigarette products sold in local markets must have digital stamps
The registration for the Digital Stamps Scheme is required by the Excise payers who import cigarette products and their relevant supply chain organisations from production until the release of the products to the local market in Bahrain.
This month, we are seeing many countries implementing fiscal obligations for digital service providers. In South Africa, alongside these new obligations, we can see a direct impact on the content required in invoices, too, alongside these new obligations.
The South African Revenue Service (SARS) has clarified the new requirements for tax invoices issued by digital service providers in a new Regulation issued on 10 December 2021. As a summary:
• The invoice must now contain the customer’s business, postal or residential address; an email address is no longer sufficient;
• A ‘full and proper’ description of the services supplied must be included;
• The value of the supply must now be shown on an invoice- not just the VAT amount, as previously was the case.
Such changes also serve a more practical purpose. South Africa taxes B2B supplies of digital services by foreign businesses. Implementing more stringent measures in respect of the invoice data content will make it significantly easier for buyers to reclaim VAT.
On 16 February 2022, the European Parliament published a resolution on the implementation of the Sixth VAT Directive (2020/2263(INI), concerning how the VAT gap can be reduced.
The main incentives behind the report were to make improvements to the current Directive and establish a more streamlined, simple, fraud-proof and effective VAT system. It is envisaged that digitalisation will be a means to achieve these aims.
The website of the European Parliament provides further details around this.
Last month we outlined Serbia’s plan to implement e-invoicing in phased approach across the country within the next 2 years. Alongside the introduction of e-invoicing, we can expect some changes to the content of the invoice itself.
In late 2021, the Minister of Finance in Serbia adopted a ‘rulebook’, which stated the following:
• If a VAT invoice is submitted in e-invoice form, the place of issuance of the invoice does not need to be included;
• There is a new mandatory element for a Serbian invoice- the advance payment invoice for an advance payment invoice.
This ‘rulebook’ aims to synchronise rules on the issuance and content of VAT invoices with new regulations being introduced in respect of e-invoicing.
With the upcoming e-invoicing mandate expected during 2023 and new recent SAFT-requirements, Poland is overseeing a busy period in the re-structuring of its fiscal operations.
Another significant change being introduced in Poland is the introduction of new VAT groups.
Poland will permit the formation of VAT groups in Poland- these are groups which will typically be formed based on financial, economic or organisational ties. Taxpayers can be based in Poland or abroad- but if the latter, it is expected that they will conduct their business through a branch in Poland. Groups must be formed for a minimum of 3 years.
A representative of the group will perform any VAT- related responsibilities. Any transactions between the members of the same VAT group will not be subject to VAT- although transactions with entities outside the VAT group will in effect be deemed to be transactions with the entire group.
This comes with some benefits- transactions between members of the same group will not be subject to VAT and the corollary of reduced administrative-related duties relating to VAT.
These regulations are expected to come into effect on 1 July 2022.
The Polish Ministry of Finance has this month published the new JPK_FA structure. Alongside the new structure, an information brochure has been published, outlining the main changes that have been introduced.
The new structure can be located on the Polish National Tax Administration website.
Australia has proposed a Business E-invoicing Right (BER) to encourage wider business adoption of e-invoicing. Under this proposal, businesses are legally obliged to adopt and send e‑invoices if requested by their customers. BER will be implemented first on large businesses by July 1, 2023, then on medium businesses by July 1, 2024, and on small businesses by July 1, 2025.
The Australian government has initiated a public consultation to seek stakeholder opinions on BER and further measures to support business adoption of e-invoicing. It will not be long before we learn more about the BER project.
The JPK is a set of data which is generated from a business’ IT system. This usually contains information about business operations for a set period of time. In Poland, this is only sent in electronic form and has a very specific layout. It allows the exchange of important information between businesses and tax authorities.
A new version of the JPK was published on 1st January 2022. Inevitably businesses will need to adapt to the new version- and this will take time. To this effect, the tax authorities have indicated they will not demand the new version – JKP_EWP (3) until April 2022.
The new version accommodates two new tax rates (12% and 14%), which have been added to the optional list node.
The new version can be found on the National Tax Administration website.
EU Member States have lost an estimated 134 billion euros in VAT revenues in 2019 according to the 2021 Report on the VAT Gap released by the European Commission. The VAT Gap did decrease between 2015-2019, but remains very significant. The report can be found here.
Simplified Policies on the Application for Registration of Computerized Accounting System (CAS) have been introduced under Revenue Memorandum Circular No. 05-2021.
There is no longer a requirement for taxpayers intending to use a CAS to obtain a PTU (Permit To Use). Taxpayers can receive an Acknowledgement Certificate” from the BIR (Bureau of Internal Revenue) if all their documentation requirements are met. Pre-evaluation or demonstration of the system is no longer required but will be subject to post-evaluation by the concerned Revenue District Office.
All taxpayers with existing Permit To Use CAS are not required to apply for registration, the approved PTU previously issued by the Bureau will still be valid except for special circumstances.