Indirect tax bytes

“Bytes” contains a summary of various indirect tax developments worldwide.

• Anguilla: A Goods and Services Tax (GST) regime became effective on 1 July 2022 (for prior coverage, see the Indirect Tax Bytes column in the April issue of Indirect Tax News). The standard GST rate is 13% (with a 0% rate applying to certain supplies and certain supplies are exempt) charged on the value of imports and on the value-added on goods and services supplied domestically by GST-registered businesses. The government subsequently announced that GST will not be imposed on financial services and there will be 12-month GST exemption for all fuel imports and an exemption for fruit and baby formula.
• Czech Republic: The Czech Republic is permitted to exempt taxable persons with annual turnover below EUR 85,000 (rather than EUR 35,000) from VAT until the end of 2024. This derogation was approved by the European Council and published in the EU official Journal on 2 June. The derogation is designed to reduce the compliance burden on small businesses and prevent distortions of competition in the Czech market.
• European Union: The Council of the European Union has authorised the European Commission to open negotiations with Norway to update and expand the 2018 EU-Norway VAT agreement on administrative cooperation, combating fraud and recovering VAT claims. The Council wants to expand the agreement to include administrative enquiries carried out jointly (joint audits) and additional means of information exchange. Norway is the first non-EU country to conclude such an agreement with the EU.
• India: In a notification dated 24 June 2022, the government extended the “compensation cess” for another four years (through 31 March 2026). The cess, which was due to expire on 30 June 2022, is collected on certain supplies subject to GST and the amount collected is paid to the Indian states to compensate for the loss in revenue due to the introduction of GST.
• Ireland: In a press release issued on 10 May, the Minister for Finance announced that the reduced VAT rate of 9% will continue to apply to the tourism and hospitality industry through 28 February 2023.
• Italy: As from 1 July 2022, electronic invoicing applies to small businesses with annual turnover exceeding EUR 25,000 in the previous year
• Kosovo: As from 21 June 2022, the tax authorities will set off VAT tax credits against outstanding tax debts for taxpayers with VAT credits exceeding EUR 3,000 for a consecutive three-month period and outstanding tax debts exceeding EUR 5,000. Credits remaining after the offset will be refunded to the taxpayer.
• Oman: The tax authorities are evaluating the implementation of VAT e-invoicing and have issued a request for information to tax stakeholders on the steps required to implement e-invoicing. To date, Saudi Arabia is the only GCC (Gulf Cooperation Council) state to introduce e-invoicing.
• Poland: A decision by the EU council that authorises Poland to make e-invoicing mandatory on a temporary basis for taxable persons established in Poland was published in the EU official journal on 17 June 2022. The measures, which will apply during the period 1 January 2024 through 31 December 2026, will be optional and are designed to reduce VAT fraud and evasion and facilitate compliance by taxable persons.
• Romania: A draft emergency ordinance published on 9 June 2022 extends the application of the VAT reverse charge on specific supplies, such as mobile phones, integrated circuit devices, tablet PCs, laptops and gaming consoles, etc.
• Saudi Arabia: The Zakat, Tax and Customs Authority has issued a guide that clarifies the VAT treatment of employee benefits and compliance obligations of employers in relevant cases. In a separate development, a resolution published on 12 June 2022 increases the customs duties on 99 categories of imports in an effort to encourage the sale of local goods.
• St. Lucia: The government approved a one-year tax amnesty that runs from 1 May 2022 to 30 April 2023 for taxpayers with existing tax liabilities. Taxpayers with outstanding liabilities for the tax period 2000 to 2020 will receive a 100% waiver on penalties and interest on all taxes except VAT, withholding tax and pay-as-you earn.
• Taiwan: The Ministry of Finance (MOF) released clarifications on 29 June 2022 relating to compliance obligations under the VAT and Non-Value-Added Business Tax Act. According to the MOF, unless otherwise specified, the tax period is two months regardless of whether the taxpayer has any sales in the period and the taxpayer must submit a declaration within 15 days from the start of the next period, using the prescribed format and attaching relevant documentation. Any tax due must be reported by producing payment receipts after the tax is paid. Penalties will apply for noncompliance.
• Tanzania: An “upgraded” VAT filing system has been launched that provides for a single e-filing account and simplified filing processes.
• Uganda: An announcement posted on the tax authorities’ website on 22 April 2022 (and based on a public notice issued in January) introduces a requirement for nonresident suppliers of services to nontaxable persons in Uganda to register for VAT and charge VAT on such supplies, file a quarterly tax return and remit VAT to the authorities within 15 days of the end of each quarter. All compliance obligations must be fulfilled electronically through the tax authorities’ portal. The nonresident may appoint a tax agent or a tax representative to carry out its VAT obligations.
• United Arab Emirates (UAE): The UAE and Israel signed a free trade agreement on 31 May 2022, the first such accord between the two nations. The agreement eliminates or reduces tariffs on 96% of goods traded between the two countries and aims to increase annual bilateral trade to more than USD 10 billion. Although most tariffs will be removed immediately, others will be eliminated over a period of three to five years.
• United Kingdom: As from 1 July 2022, businesses registered (or liable to be registered) for VAT are no longer required to compile and submit information on sales of mobile phones or computer chips to the UK authorities. This change was announced in Revenue and Customs brief on 18 May 2022. However, businesses still are required to operate the domestic reverse charge procedure.
• World Trade Organization (WTO): During the 12th Ministerial Conference held 12-16 June 2022, members agreed to renew the moratorium on applying customs duties on electronic transmissions until the next Ministerial Conference that will take place by December 2023.