Indirect Tax Briefing: planning for the future
In this edition, we examine a variety of developments in the taxation of cross-border trade, which continue to be influenced by globalization and advances in technology.
“This publication provides a mix of articles reflecting trends and developments in indirect tax as well as information and insights on developments and hot topics in a number of countries and regions, provided by our global network of indirect tax professionals.”
Global Director — Indirect Tax
In a series of articles on Africa, we focus on the East African Community and some of the benefits available for companies that are looking to trade and invest in the area. Taxes continue to evolve to keep pace with the ever-changing world that we live and work in. We reexamine several aspects of how businesses are dealing with the indirect tax challenges of the digital age.
Preparing for an e-audit
We consider the electronic-audit capabilities being developed by tax administrations and how businesses can prepare for an e-audit, focusing on the rules that apply to foreign companies registered for VAT in France.
We also look at the new e-invoicing rules that will apply in Italy for supplies to public bodies and the introduction of new invoicing rules and e-invoices in Hungary.
The recent report issued by the Organization for Economic Co-operation and Development (OECD) under its Action Plan on Base Erosion and Profit Shifting (BEPS) on the tax challenges of the digital economy identifies the need to also address indirect taxation and the effective collection of consumption taxes with respect to the cross-border supply of digital goods and services.
The impact of EU VAT changes and digital services
This need is being addressed in the EU with changes in the application of VAT to telecommunications, broadcasting and e-services supplied to private consumers from 1 January 2015.
In addition, we look at the impactof these EU VAT changes on financial services providers and look at the practical implications in a number of key areas.
We report on similar changes for supplies of digital services made to non-taxable persons coming into force in Albania, as well as how Albania is bring its VAT system closer to the EU model.
Our country section articles include developments that illustrate the continuing importance of indirect taxes, particularly VAT, as a source of government revenues. Illustrations of this trend include Luxembourg, for example, which has recently confirmed the VAT rate increases that will come into effect on 1 January 2015, and Slovakia, which has confirmed that the planned reversal of its increase in the standard rate has been canceled.
At the same time, new VAT and GST systems continue to be introduced, for example in the Bahamas on 1 January and in Malaysia on 1 April 2015, while recent news reports also predict that the long awaited GST in India will likely roll out in April 2016.
New indirect taxes being introduced
New indirect taxes are also being introduced, such as the advertising tax in Hungary, and the plastic bag levy already introduced in Scotland that is being introduced in England in 2015.
In 2014 we have seen countries moving back and forth from stimulus to austerity and a continued reliance on indirect tax as a source of revenue. More countries continue to add indirect taxes to their tax tools overall and developments in technology impact on those working in indirect tax.
Staying on top of indirect tax changes and developments remains a challenge for all who work in this field. In this, our usual high-level overview of indirect tax changes around the world, we display graphically some of the indirect tax changes — agreed and proposed — that have taken place and those that are due to take place later this year and beyond.
Please click on each country to see which indirect tax changes are occurring around the world.
1 January 2015: VAT being introduced×
9 September 2014 to 9 December 2014: tax amnesty program applies to all taxpayers subject to the taxes administered by the Tax and Customs Authorities×
1 January 2015: standard VAT rate will be decreased to 16% (from 18%)×
1 October 2014: all foreign companies required to use e-procedures to file French VAT returns×
1 January 2015: final phase of VAT package to be introduced. The VAT place of supply for B2C supplies of e-services, broadcasting and telecommunications services will be the customer’s country in all cases
October 2014: Pre-registration to MOSS becomes available in number of Member States×
1 January 2015: standard VAT rate will be decreased to 24% (currently 25.5%) and the r educed rate will be increased to 12% (currently 7%)×
Planned increase in 2015 of the standard VAT rate has been cancelled. Rate to remain at 23%×
6 June 2014: compulsory electronic invoicing rules introduced for supplies made to Italian public authorities, tax agencies and social security agencies
31 March 2015: e-invoicing obligations will extend to all supplies made by Italian suppliers to public administrations in Italy×
Suspension of the introduction of 17.5% VAT on financial services that was originally scheduled for implementation from 1 July 2014×
Replacement of Sales and Use tax with VAT is being discussed×
1 January 2016: VAT to be introduced×
1 January 2015: standard VAT rate will increase to 17% (from 15%), reduced rate will increase to 14% (from 12%) super reduced VAT rate will increase to 8% (from 6%)×
Planned single uniform VAT rate of 17.5% planned for 1 January 2016 may not go ahead×
Temporarily increased VAT rates of 23% (standard rate) and 8% (reduced rate) will continue until the end of 2016×
Planned reversal of the increase in standard rate VAT to 19% (from current 20% rate) has been cancelled×
1 July 2014: new tax point rules for continuous supplies
15 August 2014: advertising tax came into effect×
1 January 2015: new VAT law aimed at aligning Albania's domestic law with European VAT rules comes into effect×
Plans to introduce sales tax in 2015 are cancelled×
1 April 2014: consumption tax rate increased to 8% (from 5%)
2017: consumption tax to be increased to 10% (originally planned for October 2015)×
1 June 2014: VAT pilot program extended to cover telecommunications sector×
1 April 2015: GST due to be introduced at the rate of 6%, replacing the existing sales and service taxes×
Proposed introduction of a new GST to replace most of the state and central indirect taxes currently in force, date of implementation predicted to be 1 April 2016×
The introduction of VAT with a standard rate of 10% to 12% (to replace the existing GST regime) is being discussed – proposed date not yet available×
1 June 2014: mandatory VAT registration requirement for nonresidents who supply e-services to recipients in South Africa.
Legislation on new carbon tax expected during 2015×