Compliance Category: Actualizaciones de los países

Austerity and consolidation package

Fiscal policies have always been a high priority for countries, but especially so during periods of economic uncertainty as countries endeavor to balance fiscal strategies with soaring inflation. The Czech Republic’s most recent initiative- the austerity and consolidation package – aims to do precisely this, by providing some stability in the market and reducing inflation.   

Kofax’s recent post commented on the proposal to introduce a new VAT rate in the country. The austerity and consolidation package re-affirms that the country’s intention to consolidate the reduced rates (10% and 15%) into a new single rate of 12%. The new 12% rate would apply primarily to food, medicine, magazines, construction for residential housing, and medical devices.  

The rate on draft beer, hairdressing services, beverages, firewood, and certain other items would be increased to the standard VAT rate of 21%.  Books would be exempt from VAT. Currently, these changes are scheduled for 1 January 2024, but are still subject to approval.   

The Czech Republic is a compliant territory for Kofax. If confirmed, Kofax will support the VAT rate and incorporate this as part of our e-invoicing solution in the country.  

The acceleration of the B2B e-invoicing and e-reporting mandate in Belgian is not surprising: as discovered in a recent study performed by the International Monetary Fund (IMF), the Belgian tax authorities fail to collect approximately one fifth of the VAT due on products and services. The figures published represent a slight improvement from the pandemic period, but remain high, especially when compared with neighboring countries.  

The study will dictate the trajectory to further reduce the VAT gap in Belgium. Other initiatives, aside from the mandate, include the modernisation of the VAT gap and cash registers.   

 The IMF report can be accessed via the following link:  

https://www.imf.org/en/Publications/CR/Issues/2023/05/17/Belgium-Technical-Assistance-Report-Revenue-Administration-Gap-Analysis-ProgramThe-Value-533507?cid=em-COM-123-46566  

 Belgium is a compliant territory for Kofax and we intend to support the upcoming e-invoicing and e-reporting mandate. You can read further information about this here.  

 

The United States of America may appear to have a muted involvement in the e-invoicing circuit when compared to its European counterparts, but recent developments indicate that this is set to change.  

The Business Payments Coalition (BPC) E-invoice Exchange Market Pilot has created a new entity, the Digital Business Networks Alliance (DBNAlliance), which is intended to provide support for B2B payments. This new legal entity holds an overseeing role for the electronic exchange framework. The network intends to provide businesses with a solution for the invoice exchange and to transfer e-documents securely. To aid businesses, they have set out e-invoicing standards and policies to safely exchange e-invoices in the B2B framework. Currently, there are no strict compliance obligations with regards to mandatory invoice content in the US, and so the DBNA is, in many respects, viewed as progressive body which aims to re-define the direction of e-invoicing in the US and align it with many of its global counterparts.   

 The BPC will focus on the improvement of the B2B payments and their modernization and will launch the E-remittance Exchange Pilot in the near future, together with the Federal Reserve to help foster further growth of e-invoicing in the country.  

 Kofax is pleased to confirm that it is on the interim board of the DBNA, staying very close to e-invoicing developments as they advance in the US, with a view to also considering how this can benefit our US market.   

  

Commission survey requesting e-invoicing feedback

The European Commission has announced the launch of a survey to collect additional feedback in the context of miscellaneous topics relating to the e-invoicing directive. The survey intends to cover all e-invoicing stakeholders’ views on various groups from a diverse range of groups, including small and medium-sized enterprises (SMEs), accountants and large corporations. By requesting this diverse feedback, it aims to furnish a solution that caters for all taxpayers, irrespective of differentiating factors such as size, processing capabilities, technical infrastructure, etc.  

Specifically, feedback is requested in respect of the following:  

  • synergies with other EU initiatives  
  • uptake of e-invoicing in public procurement  
  • effects of the directive on the internal market  
  • efficiency of the directive in meeting its objectives  
  • future needs of e-invoicing in Europe.  

These are viewed as drivers that can positively nurture e-invoicing growth.  

A deadline of 30 June 2023 has been provided for feedback. The survey can be accessed via the following link:   https://ec.europa.eu/eusurvey/runner/eInvoicingFeedbackCollection  

Split payment renewal

Spit payments in the e-invoicing terrain have most recently been associated with Poland. By means of some background, split payments often serve as an effective measure to maintain tax regulation, as the buyer typically pays money into a bank account dedicated solely to tax purposes. Critically, this ensures the payment of VAT and is thus viewed as an effective measure to reduce the VAT gap.  

Italy, like Poland, has also made use of the split payment mechanism, although to date this has been restricted to the Business to Government (B2G) sphere. The split payment mechanism in Italy has been in operation since 2015 and was due to expire in June 2023.   

The Italian Minister of Finance has announced that the procedure for the renewal of the split payment is nearing completion, reinforcing the split payment as an integral feature of Italy’s e-invoicing topography.   

Introduction of free services via new API Management platform

The Revenue Agency published a new provision on 4 April 2023 relating to the use of free services in API Management platform and General Conditions.  

The new API management platform was established on 15 May 2023 and provides free services regarding the validation of the data for taxpayers who are interested in using it with their own systems.  

Further details regarding the same can be located on the Italian authority website via the link below:   https://www.agenziaentrate.gov.it/portale/documents/20143/5202816/Provvedimento+del+4_4_23+servizi+in+Api.pdf/4e3a2055-c75b-fb0c-daac-7dda27ee6a1c  

  

SLIM VAT 3 publication

On 5 June 2023, the Polish government published an amendment to the Goods and Services Tax Act. Slim VAT 3 aims to simplify the tax process in Poland.   

 While VAT sanctions with regards to breaches against the package were set at fixed amounts, tax authorities will now exercise their discretion regarding sanctions- reducing or increasing these in line with the alleged offence.   

You can read more about Poland’s SLIM 3 package here.   

Releases updated InvoiceNow FAQs

Singapore currently does not require mandatory e-invoicing for B2B or B2G transactions, but taxpayers can issue them voluntarily via the InvoiceNow platform. The InvoiceNow network is based upon the Peppol network (Peppol BIS billing 3.0 standards), though VAT-related rules have been replaced by GST rules. The IMDA strongly recommends e-voicing although it is not mandated.

The IMDA (Infocomm Media Development Authority) of Singapore has updated the FAQ related to InvoiceNow, which provides information on what InvoiceNow is, how it differs from PDF e-invoicing, and many other useful details.

It is expected that Singapore will mandate the use of the InvoiceNow platform for B2G transactions in the near future , However no specific timeline has been revealed yet.

 

Response to VAT in the Digital Age (VDA) proposal

Romania is the latest EU member State to comment on the VAT in the Digital Age (ViDA) proposal, following in the path of Italy last month who actively engaged with the proposal and launched a public consultation in response.

In respect of the e-invoicing and e-reporting components of the proposal, the Romanian Senate is largely supportive of the proposal. Specifically, however, they have noted that domestic transactions can be aligned with local requirements, rather than those set out in the intra-community reporting obligations.

The ViDA proposal has significant ramifications for e-invoicing and e-reporting over the coming years. You can read more about the proposal here.

Slim 3 reforms

Poland’s fiscal trajectory in 2022 was a busy one as it frequently altered its tax rates in an era of economic uncertainty. This, along with other fiscal initiatives, were condensed into a package what is known as the ‘SLIM’ package. Poland is currently in the midst of implementing ‘SLIM 3’.

The SLIM 3 package was finally approved in March 2023- but its implementation date has now been delayed to July 2023.

Slim 3, as expected, is extensive, covering the following issues:

  • The lack of need for an invoice to settle VAT
  • Further VAT exemptions
  • Further transparency with respect to VAT bindings
  • The option to transfer funds deposited in VAT accounts of VAT group members
  • Reduction of certain VAT penalties

SLIM 3 strives for the simplification of fiscal practices in the country, with the aim of creating a process that is streamlined, accessible and simple to facilitate.

The Polish government has already referred to a SLIM 4 package, where known details in relation to the same are sparse. Tungsten Network will follow developments in relation to the same, ensuring that any VAT rate changes are incorporated as part of our e-invoicing solution.

VAT registration threshold rise

VAT registration thresholds were generally viewed as a stable and steady feature- but the economic volatility of the last few years- which saw a pandemic, inflation, and even impending recessions- have seen governments acting with considerable latitude in respect of VAT registration threshold changes. Only last month saw Italy and Lithuania either apply or in the process of amending VAT registration thresholds. Typically, an EU derogation is required to facilitate this.

Hungary is the latest country to follow the same curvature as some of its recent European counterparts, with the EU granting Hungary permission to raise its VAT registration threshold from 48,000 Euros to 71,500 Euros.

The rise holds obvious benefits for small and medium enterprise businesses, who will be relieved of multiple VAT obligations. The increase also does not appear to come at a considerable cost to Hungarian revenues, which stand to see a loss of only 0.05% of the total VAT uptake.

VAT return modifications to accommodate new tax rates

The overhaul of a country’s VAT rates is a significant fiscal measure, and the decision to enact such a measure is often influenced by economic, social, and political factors. Switzerland’s VAT rate changes, projected for 1 January 2024, were triggered by social agendas that fuelled the need for change in Switzerland’s fiscal framework. You can read about the expected VAT changes in Switzerland and the underlying motivations for the change in our recent post here.

Tax changes are, however, just one component within a much broader fiscal infrastructure, and the Swiss government will need to enact several other changes to accommodate the new VAT rates. One of these adjustments is the modification to the Swiss periodic VAT return to take account of the new rates.

The ‘old’ rates (i.e. those that apply prior to 1 January 2024, and which are currently in use) may still be required- and so the VAT return will continue to incorporate these rates, alongside the new rates which come into existence from 1 January 2024.

Tungsten Network will support the VAT rate changes in Switzerland scheduled for 1 January 2024. Cognizant of the fact that the VAT rates which are currently in use and which will be replaced by new VAT rates will still be required- for example, when raising credit notes- our solution will also contain both pre and post 1 January 2024 tax rates to accommodate our Swiss market.

Expanding scope of issuer on Full digitized e-fapiao

There have been multiple announcements made by the Chinese State Tax Administration (STA) recently regarding the expansion of  the fully digitized e-fapiao project. 

 With effect from March 2023, selected taxpayers in the following provinces will be required to issue fully digitized e-fapiao via the government portal:  

  • Yunnan  
  • Jilin  
  • Henan  

All taxpayers in China are now able to receive fully digitized e-fapiao issued from pilot taxpayers. 

Temporary introduction of the reverse charge

Due to the introduction of the split payment mechanism in 2019, Poland has largely not made as much use of the reverse charge to the same extent as its European counterparts. However, Poland is now reversing this trend. 

On a temporary basis, the reverse charge will be permitted on the following domestic transactions: 

  • Supplies of gas; 
  • Supplies of electricity; 
  • Provision of services for the transfer of greenhouse gas emissions allowances  

The changes are complex. Tungsten Network would recommend consulting a tax advisor for further information in respect of these changes if required.  

The reverse charge is viewed as an effective measure to combat VAT fraud by essentially placing the responsibility to pay VAT on the buyer rather than the supplier. The VAT in the Digital Age (ViDA) proposal also has proposed some intriguing changes in respect of the reverse charge. You can read more about this, and the proposal in general, here. 

Summary of VAT Expert Group meeting (with a focus on ViDA)

The VAT expert group convened in March 2023, and, unsurprisingly, the main topic discussed was the VAT in the Digital Age (ViDA) proposal. It was acknowledged that overall, the reception from all Member States has been positive, with limited major cause for concern.  

The proposal focuses on 3 main areas: Digital Reporting Requirements (DRRs), the platform economy and single place of registration. Again, it was noted that the major cause of concern rests with the latter two elements of the proposal. Despite concerns being raised, the feedback has been positive and constructive.  

A summary of the minutes of the minutes can be accessed below:  

https://circabc.europa.eu/ui/group/cb1eaff7-eedd-413d-ab88-94f761f9773b/library/7290a16a-84f5-4f0c-bc98-3f60151b22be 

 

Proposed VAT registration rise

In what appears to be a busy month for countries raising the VAT threshold, much like Italy this month who is proposing a similar measure, Lithuania is seeking to raise its VAT registration threshold. 

Lithuania seeks a rise from 45,000 Euros to 65,000 Euros.  

While streamlining of the compliance and fiscal-related procedures typically serves as the main motivation behind this, it is believed that external factors-particularly inflation, also can trigger a request for a rise in the VAT registration threshold. 

Approval for raising the VAT threshold is currently with Parliament. The EU VAT Directive outlines some limits in respect of the application of raising the VAT threshold, but it is possible to apply for a derogation to circumvent this.