Compliance Category: Actualizaciones de los países

New VAT law

Streamlining a cumbersome VAT process is often a central objective when drafting VAT laws. We have seen this recently in both Greece and Italy, who are offering re-filled VAT returns.   

Slovakia is introducing a new VAT law, which similarly aims to simplify the VAT process for taxpayers.  This will take effect from 1 April 2023 and will aim to make the VAT process more accessible and equitable for all taxpayers.   

Slovakia is a compliant territory for Tungsten and we will monitor any further e-invoicing changes in the country.  

Fiscalization 2.0 – new system for cashless payments

Croatia’s e-invoicing drive has, to some extent, been overshadowed by its neighbouring countries, where plans for mandate implementations are developing with some speed. However, this month has marked a significant step in the digitisation of Croatia’s fiscal procedures, specifically with respect to e-reporting.   

The Croatian Tax Administration launched a new project referred to as Fiscalization 2.0, which will focus on the implementation of an e-reporting system for cashless transactions with an integrated e-Archive and advanced online bookkeeping system. This project will potentially impact the current e-invoicing, e-archiving and e-bookkeeping obligations in the country.  

For more information on the Fiscalization 2.0 project, you can refer to the publication available on the website of the Minister of Finance:   

https://www.porezna-uprava.hr/HR_projekti/Stranice/Fiskalizacija_2.0.aspx   

United Kingdom – Windsor framework agreement

Brexit, which was implemented in 2020 and which ultimately sparked the UK’s departure from the European Union, presented multiple challenges from a fiscal perspective. One of the most significant challenges was the formation of what is commonly referred to as the Northern Ireland protocol.   

The Northern Ireland protocol provided that EU VAT rules on VAT will apply to Northern Ireland– which was always a contentious issue as by some this was viewed as creating a ‘hard border’ between Northern Ireland and the rest of the UK, which were subject to UK-specific rates. For Tungsten, this presented planning on multiple fronts, as transactions subject to the protocol required the insertion of an XI prefix, as opposed to the GB prefix previously used.   

The proposed Windsor Framework agreement modifies rules for movement of goods between Great Britain and Northern Ireland. A so-called ‘green lane’ is proposed for internal trade, which results in customs checks and surplus checks effectively abolished between the two.  

In other important changes:  

  • The UK and Northern Ireland will share the same VAT rates  
  • VAT rates can now be applied UK-wide  
  • Goods between Northern Ireland and Republic of Ireland subject would be subject to a ‘red lane’, which effectively means that customs checks and additional checks between the two are maintained.   

The introduction of the Northern Ireland Protocol triggered multiple changes in the Tungsten system. Therefore, the reversal of these policies also means it is likely changes will need to be initiated in the Tungsten framework.   

It is important to note that the Windsor Framework Agreement provisions need to be agreed unanimously by the European Parliament, and we will closely monitor the approval of these changes and any changes we need to instil to remain compliant with the agreement.   

Greece: Data transmission deadline delay

The deadlines for transmitting data to the MyData e-reporting platform in Greece have been subject to some fluctuation.   

These deadlines again have been further re-defined by the Greek Tax Authorities, the Independent Authority for Public Revenue (IAPR), via the publication of a new decision.   

This decision effectively means that deadlines for transmitting certain data generated in 2021, 2022 and 2023 are postponed.   

Currently, standard transmission deadlines remain on target for data generated in 2024.   

Pre-filled VAT returns

 

Countries frequently review their fiscal procedures, often primarily with a view to simplify the tax process for the end user- the taxpayer.  

Last month in Greece we saw the government offer taxpayers, on an optional basis, the provision to access pre-filled VAT returns. This month Italy is offering taxpayers, under certain circumstances, a similar incentive.   

The pre-filled VAT returns are intrinsically linked with e-invoicing in Italy- as the taxpayers selected for this functionality will be based on 2022 transaction data issued via the Italian e-invoicing platform, the Sistema di Interscambio (SdI). Thus far, this service is only available to resident taxpayers using the cash regime and filing quarterly.   

The shift to pre-filled VAT returns shows Italy following the trajectory of countries implementing similar measures, such as Spain and Portugal.   

The drive towards digitisation and automation of fiscal procedures more generally is mirrored in the VAT in the Digital Age (ViDA) proposal, manifesting the streamlining of fiscal procedures is very much in the public consciousness. You can read more about the ViDA proposal in our recent post here.   

 

Introductions of New e-Invoice Portal

GSTN has released four new IRPs (Invoice Reporting Portals) for reporting e-invoices in addition to NIC-IRP. The beta version of the new e-Invoice portal has been launched, which allows taxpayers to check enablement status, search for IRNs, and access all IRP portals. GSTIN credentials can be used to log into the new e-invoice portal for select services relating to GSTIN profiles.    

The urls of IRPs sites authorised to generate IRNs are:  

For more information, please access here to see the official advisory issues by GSTN.   

New regions included to fully digitized e-fapiao project

There has been an increasing movement towards fully digitalized e-fapiao since China took off the zero-COVID policy. The State Tax Admin has announced that starting from 28 Jan, selected taxpayers from Shanxi, Qingdao, Dalian, Chongqing and Tianjin will be required to issue fully digitized e-fapiao using the unified e-invoicing platform built by the STA.   

 Here is an updated overview of how the Fully Digitized E-fapiao operates to date:     

Who can issue fully digitized e-fapiao: Selected taxpayers in Guangdong (exc Shenzhen), Shanghai, Sichuan, Xiamen, Inner Mongolia, Shanxi, Qingdao, Dalian, Chongqing and Tianjin. Pilot taxpayers in these regions should issue fully digitized e-fapiao via the government portal, which provides taxpayers with access to 24-hour online services to issue, deliver, and verify their fully digitalized e-fapiao free of charge.  

Who can receive fully digitized e-invoice: all taxpayers in China can accept the fully digitized e-fapiao issued from pilot taxpayers.  

PM Anwar confirmed GST will not be re-introduced

Malaysia historically adopted the Goods and Services Tax system, which was then replaced by the Sales and Service Tax in 2018. Government ministers and private industries are discussing re-introducing the Goods and Services Tax system, arguing that it is the most effective way to replenish the economy. Ismail Sabri Yaakob, the former prime minister, also backed this proposal. 

However, the table has turned, since the new PM Anwar Ibrahim took office in November 2022. According to PM Anwar, GST will not be reintroduced, instead, the government will be looking to reduce subsidies for the wealthy as a measure to increase the country’s revenue. 

Allows Qualified Invoice registration after March 2023

Our previous blog has talked about the upcoming consumption tax reform in Japan, where businesses are required to provide a “qualified invoice” to claim input tax credits. The “Qualified Invoice system” will follow the PEPPOL PINT standards and is to be implemented in October 2023.  

 To be eligible to issue a “qualified invoice,” vendors must register with their local tax office by March 2023. The government recently announced that registration applications after this date will also be accepted, this is to ease the time burden on the taxpayers.  

Rather than being a mandate, this reform is a recommendation from the Japan Digital Agency (JDA). The new invoice system will, however, affect all Japanese businesses who wish to claim input tax. 

VAT becomes the primary source of tax revenue

The UAE implemented VAT at 5% in January 2018 in accordance with the GCC (Gulf Cooperation Council) VAT framework.  The total revenue collected from VAT has reached more than Dh 95.4 billion ($26 billion) as of October 2021.  

“Now that we have passed the five-year mark since the introduction of VAT, it is fair to conclude that the tax has been a success and a true testament to the UAE’s ability to adapt to the new economic realities,” Nimish Goel, Partner at WTS Dhruva Consultants, spoke at the fifth anniversary of VAT. Additionally, reports have revealed that VAT will continue to be the primary source of tax revenues for a few more years in the country.  

VAT in the Digital Age proposals available in all languages

Last month, we informed you that the VAT in the Digital Age (ViDA) proposal had to be published in all EU languages before the period for feedback could commence. 

The proposal has now been translated into all EU languages, which effectively means that feedback (Consultation Period) for a period of 8 weeks, until 4 April 2023, has now commenced. 

EU and Singapore – Digital Partnership

The focus in recent weeks, from a European perspective, has been centred internally in Europe, what with the publication of the VAT in the Digital Age (ViDA) proposal. However, other initiatives are being launched which shed insight into the global outreach of e-invoicing.  

On 1 February 2023, the EU and Singapore announced the commencement of a new Digital partnership. Among other things, this digital partnership endeavours to promote co-operation in specific areas, with a focus on paperless trading and electronic e-invoicing.  

Tungsten will follow developments in respect of the Digital Partnership  and monitor any significant issues that arise as a result of this joint venture.  

Further application of the reverse charge

Spain has further widened the scope of goods subject to the reverse charge, in addition to our update last month, which cited specific goods now subject to the reverse charge in the country. As previously stated, the reverse charge shifts the onus of paying VAT on the buyer rather than the seller and consequently, regulates the flow of VAT to governments and is therefore an effective mechanism to guard against tax evasion.  

Gold, mobile phones, games consoles, laptops and computer tablets are now also subject to the reverse charge in Spain.  

 

Proposal for modernised VAT law

As well as reducing VAT gaps, multiple countries deploy new fiscal processes as a means to simplify the VAT process, relieving taxpayers of cumbersome duties. This has also been one of the key objectives of the VAT in the Digital Age (ViDA) proposal, which aims to digitise the VAT process. You can read further about the proposal on our recent post here.  

Individual countries have a similar motivation for reviewing their fiscal practices- with Sweden being no exception. Sweden is advocating a reform of its VAT law as we know it today, with the specific intention that VAT regulations can be better assimilated by taxpayers and understood more easily. The overhaul would also ensure better alignment with content in EU VAT Directive.  

The changes are extensive, but a notable change is the proposal of VAT exemptions on internal services.  

Sweden is a compliant territory for Tungsten Network, and we will monitor e-invoicing developments in the country. 

New CFE Format v.23.3

The new CFE v23.3 format has been made available by the tax authorities, with minimal modifications: the description of field B.2: Type of Code related to the nomenclature of GTIN codes. The defined validations are left unchanged.