Compliance Category: Actualizaciones de los países

Overhaul of indirect tax regime

New governments often herald the introduction of widespread new fiscal policies.

President Lula’s recent appointment in Brazil is expected to be synonymous with the introduction of colossal VAT reforms in Brazil.

Arguably, this is needed- Brazil has one of the most complex indirect tax regimes in the world, and so a significant part of this change would be the simplification of the tax process in the country.

Some proposals put forward as part of this simplification process include:

  • A sub-national VAT on goods and services
  • A second VAT tax at federal level.

E-invoicing momentum is accelerating in South America, and Tungsten is keeping abreast of e-invoicing developments in the region. We will closely monitor e-invoicing developments in Brazil.

Plastic Packaging Tax (PPT)

The Plastic Packaging Tax (PPT) was effective in the United Kingdom from 1 April 2022.

HMRC had indicated that inclusion of PPT would be mandatory at some point on a UK invoice. However, they have now reversed this decision and indicated that they will no longer adopt a legal requirement to include PPT on a UK invoice.

HMRC will still encourage businesses subject to the tax to incorporate PPT in their invoices. HMRC will also provide other methods of providing the tax on documents other than the invoice (such as price lists, for example). Spain last month introduced a similar incentive, allowing taxpayers to cite PPT on an invoice, bit also permitting for this to be communicated via a certificate.

Tungsten has the capability to support PPT today. Unlike Spain, PPT in the UK is usually subject to negotiations between the supplier and the buyer.

 

VAT in the digital age – extension of feedback period

The eight-week feedback period for the public consultation relating to the VAT in the Digital Age proposal (ViDA) is being extended every day until the adopted proposal is available in local language – extension for the feedback period now already exists until 21 March 2023.

Feedback can be submitted via the following link:

https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/13186-VAT-in-the-digital-age_en

Greek Tax Authority (IAPR) – new publication

On 31 December 2022, decision A.1188/2022 was released by the Greek Tax Authority (IAPR). The decision establishes significant changes relating to the transmission deadlines and sector-specific requirements relating to electronic data transmission to the IAPR.

The below provides a summary of the main changes within the decision:

  • Real-time transmission through ERPs: the transmission of data and documents through business management programs will be undertaken in real-time from 1 January 2024
  • QR Code: the accounting data using business management programs or the application for issuing and transmitting data on the IAPR website (timologio) could be used to generate a QR code. This QR code should generally contain a link for direct access to a digital service of the myDATA digital platform and will provide an overview of the transmitted document summary
  • E-Invoice Service Provider: for certain transactions, the adjustment stage for businesses who opted to issue and transmit documents through an e-invoicing service provider to comply with the MYDATA obligation has been extended for 6 months.

The below link (in Greek) encompasses all the MyData changes:

https://www.aade.gr/sites/default/files/2023-01/dt_30.12.2022..pdf

Extension of reverse charge application

The reverse charge mechanism is deployed by multiple countries as a means of regulating the VAT flow to tax authorities, by shifting the onus of paying VAT on to the buyer rather than the supplier. Doing so ensures the payment of VAT and it is therefore viewed as an effective fiscal measure to reduce tax evasion and, by extension, the VAT gap in a country. It is therefore unsurprising that several countries extend the scope of goods and services subject to the reverse charge application.

Spain is no exception, who have now extended the application of the reverse charge to include scrap, plastics and material waste.

Draft Law – Electronic Invoicing amendment

Serbia has published a law which amends some aspects of the law on e-invoicing. The main changes involve the following:

  • Scope: Certain entities will be excluded from e-invoicing draft law provisions- including taxpayers who are not liable for income tax from self-employment in the sense of the law governing personal income tax
  • Obligation to issue an e-invoice: The obligation to issue an e-invoice will also exist for:
    • all requests for payment from public sector entity by a private sector entity
    • all requests for payment between public sector entities.
  • Obligation to electronically record VAT calculation: The electronic recording of the VAT calculation is performed in summary, for all obligations, by showing data on the basis and calculated VAT, specifically per VAT rates, unless otherwise stated in the e-invoicing law. Specifically, electronic recording of VAT calculation is done individually, for each obligation, by showing data on the basis, VAT rate and calculated VAT in specific instances.

The Serbian Law on e-invoicing entered into force on 1 January 2023.

Local currency change to Euro

Tungsten successfully accommodated Croatia’s local currency change from Croatian Kuna to the Euro, effective 1 January 2023.

Bulgaria is similarly preparing to transition its local currency, the Bulgarian Lev, to the Euro currency. It has targeted an implementation date of 1 January 2024.

As with our Croatia local currency change implementation, this transition will involve modifications to our all invoice types in Bulgaria, including debit and credit notes. Tungsten is closely monitoring the proposed local currency change in Bulgaria and will accommodate the local currency change, if confirmed. We will keep our Bulgarian market informed with any developments regarding the change.

 

New E-Commerce VAT Reporting Rules in the United Arab Emirates

Currently, VAT registered taxpayers in the UAE are required to report taxable supplies in the emirate where the fixed establishment is located for resident taxpayers, or in the emirate where the supply is received for non-resident taxpayers. The UAE is made up of seven emirates: Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah, and Umm Al Quwain.

As of 1st July 2023, the reporting rule will change for resident taxpayers that engage in e-commerce supplies.

Change of reporting rule for resident taxpayers from 1st July 2023:

  • Resident taxpayers must report taxable supplies made through e-commerce in the emirate in which the supply is received, when the total value of supplies made through e-commerce exceeds 100 million UAE dirham ($27 million) per calendar year.

By adopting this new reporting requirement, the VAT revenue distribution between each emirate should be more equitable, and this requirement is in line with the global trend of taxing e-commerce supplies at the place of consumption.

ATO could cancel your ABN if there is no business activity detected

Australia’s Tax Office has issued an important announcement regarding ABN holders. The Australian Business Number (ABN) is a unique 11-digit number that identifies your business to the government. Taxpayers are required to register for an ABN for certain tax purposes, such as goods and services tax (GST) and pay as you go (PAYG) withholding.

As stated in this recent announcement by ATO, an ABN could be flagged for cancellation if the holder has not reported business activities in their tax returns, or if there is no evidence of business activity in other lodgements or third-party information.

In the event that an ABN has been identified as inactive, the ATO will notify the holder of the next steps, whether they are to reactivate or cancel the ABN.

VAT form digitisation

The VAT in the Digital Age (ViDA) proposal has dominated the e-invoicing and e-reporting landscape in the past few weeks. In line with this drive for digitisation of the tax process across Europe, we are also seeing multiple countries implement fiscal policies to digitise their own tax procedures, in addition to e-invoicing and e-reporting measures.  

Greece is no exception to this, and, with the objective of creating a more efficient and less cumbersome tax process, is now voluntarily offering taxpayers the facility to use pre-completed VAT returns from the start of 2023.  

Delay to bookkeeping act

On 13 December, Denmark delayed the implementation of the Bookkeeping Act. Please refer to Tungsten’s previous post summarising details of the Act.  

The delay is most likely due to the takeover of the new government. Once the new government is fully functional, new timeframes for implementation will be announced.  

Increase in VAT registration threshold

Increasing the VAT registration threshold in a country has multiple fiscal implications- one being the simplification of the VAT process, as a reduced number of businesses will be subject to being caught within the scope of the VAT registration threshold. Small businesses especially stand to benefit.  Of course, countries also need to consider the impact these will have on their economic position.  

From 1 January 2023, the Czech Republic will increase its VAT registration from CZK 1 million to CZK 2 million- the latter equating to c. 80,000 Euros. The doubling of the VAT registration threshold represents a significant reduction in the number of businesses falling under the scope of the VAT threshold.  

Public consultation of VAT group logical structure

Poland permits the use of VAT groups in the country. Our previous post commented on how VAT groups typically operate and the relative advantages of using these. As the link shows, using VAT groups can provide taxpayers with several benefits.   

On 29 December 2022, The Polish Ministry of Finance launched a public consultation on the new logical structure of internal records maintained by members of a VAT group.  

The structure is key to VAT groups, who can use it to submit records of VAT-related activities undertaken by the group for monthly periods to the tax office from 1 July 2023.  

Feedback will be reviewed once compiled and a logical structure released accordingly.  

Extension of application of reverse charge

Multiple countries use the reverse charge to reduce tax evasion and consequently reduce VAT gaps. The reverse charge mechanism operates by shifting the burden of paying VAT to the buyer rather than the supplier. This prevents the supplier from charging the VAT element but not paying VAT directly to the tax authorities. As a result, the reverse charge today is viewed as an effective measure by multiple EU Member States to regulate the flow of VAT to tax authorities.  

Belgium has now extended the reverse charge mechanism to also cover the construction and public works sector and in doing so has widened the scope of services subject to fiscal policies that seek to control tax evasion.