Wednesday December 16, 2009
Microsoft has released a set of new updates to help businesses with VAT compliance.
The VAT 2010 updates will allow customers on the Microsoft Business Ready Enhancement Plan to easily comply with the changes to VAT regulations in the New Year.
Users of Microsoft Dynamics ERP will also be able to include services in the European Commission Sales List report as changes to EU tax law take effect.
The updates have been released for Microsoft Dynamics AX, Microsoft Dynamics GP and Microsoft Dynamics NAV, which all support VAT 2010 within the core application.
Microsoft said further updates will be released as other EU member states specify local details.
Crispin Read, general manager at Microsoft Dynamics ERP, said: "It’s important that our customers and partners have the tools they need to help ensure compliance with basic legislation in whichever region they operate."
Businesses are currently gearing up for the changes in regulations which will see VAT increase to 17.5 per cent from the current 15 per cent on January 1st 2010.
Find out more about VAT compliance
Wednesday December 9, 2009
Most car buyers in the UK would prefer the VAT rate to be kept at 15 per cent, a new survey has found.
A poll conducted by car supermarket Motorpoint found that over half (60 per cent) would like chancellor Alistair Darling to freeze the current VAT rate in the New Year.
Most of the 1,500 respondents said they would prefer a reduced VAT rate to the car scrappage scheme being extended so they could save themselves hundreds of pounds when buying a new or almost new car.
David Shelton, managing director of Motorpoint, said: "Unlike the scrappage scheme, keeping VAT at 15 per cent would benefit all car buyers, saving them hundreds of pounds at a time when they need it most.
"Let’s hope the chancellor delivers some good news on the VAT front in [the] pre-Budget report."
A recent poll conducted by Auto Trader found that millions of Britons were unaware that the government’s car scrappage scheme is scheduled to come to an end in February next year.
Find out more about VAT compliance
Wednesday December 2, 2009
A new VAT regulation by the European Commission could cost IT firms in the UK hundreds of thousands of pounds, industry figures have warned.
Most technology firms have a classic group structure of a pure holding company that stands above various subsidiaries. These firms usually group holding companies with subsidiaries, which allows them to recover VAT.
However, the new EC stipulation will make this type of grouping illegal, which means VAT incurred by a pure holding company will be an additional cost.
Business advisory firm Grant Thomas pointed out that this will drastically raise companies’ costs at such a critical economic period.
Niki Dixon, partner at the company, explained that if a holding company were to raise capital of £5 million, the advisors’ fees would be around £500,000, which would mean a VAT bill of £100,000.
"[This] will increase the real cost of raising money at a time when every penny counts," she said.
The UK and six other EU member states have been given until January to comply with the regulation.
Monday November 30, 2009
The UK government’s plan to impose a 50p tax on all fixed phone lines will be subject to VAT, it has emerged.
Leaked documents reported in The Times newspaper show that the government’s Next Generation Fund, which will finance the rollout of next generation broadband services around the UK, will now cost 58.75p per line when VAT is increased to 17.5 per cent.
The typical household with one line for phone calls and another for internet or fax use would pay a total of £14.10 a month, while those with three lines could see their bills pushed up to £21.15.
The Confederation of British Industry called on the government to clarify exactly how the charges will apply to individual businesses with multiple lines.
A government spokesperson did not comment on the contents of the leaked documents but said: "We want everyone to experience the opportunities that next-generation broadband offers, which is why we plan to introduce a 50p levy on all fixed lines to help the market to access homes and businesses in hard-to-reach areas."
Ministers hope the fund will raise £175 million a year to pay for high-speed internet connections in rural areas.
Thursday September 3, 2009
The EU carbon credits market is still susceptible to VAT fraud, experts have warned.
Despite calls to tighten up the carbon market across Europe, a new investigation by Reuters reveals that there are still a number of tax loopholes and regulatory flaws open to exploitation by unscrupulous businesses.
The report found that although a few EU member states have taken action to curb tax fraud on carbon permits, scammers are simply moving into other countries which do not have similar stringent policies in place.
James Emanuel, a director at broker CantorCO2e, told Reuters: "Carbon permits are a tax on emissions and applying VAT to them is effectively putting a tax on a tax, which is kind of ludicrous."
David Bates, of emissions broker CarbonDesk, added that the fraud schemes put innocent intermediaries who are unknowingly complicit in the scams "in a very awkward position of responsibility and liability".
Last month, the UK’s tax authority HM Revenue & Customs made its first arrests in the country for VAT carbon credit fraud totalling some £38 million.
Monday August 3, 2009
The government has introduced new legislation aimed at removing VAT from carbon credits traded within the UK.
The new law is designed to prevent the risk of VAT fraud amid a growing trend of fraudsters using commodity trading in emissions allowances to steal VAT revenues.
A loophole in the system means that people can buy credits from other countries free of VAT and then selling them in the UK and charging VAT to make a profit.
Andreas Arvanitakis, senior analyst at Point Carbon, told Business Green: "The suspicion was that it was affecting trade volumes but we don’t know how much of a grip it had really taken in the UK."
French officials initially removed VAT on emission allowances in June, after fraudulent trading took place on the Bluenext exchange. This prompted the Netherlands to follow suit.
Traders have now called for an EU-wide VAT exemption on carbon credits, saying that while the new laws implemented in the UK, France and the Netherlands may stamp out fraudulent activity in those countries, it does nothing to solve the problem elsewhere.
Monday July 27, 2009
Mobile phone and telecommunications manufacturers in Uganda have called on the government to scrap VAT for their goods.
Industry figures said the abolishment of the 18 per cent VAT rate on mobile phones plus the 0.3 per cent clearance fee could help to increase mobile phone penetration in the country and enable consumers to benefit from improved technologies, reports New Vision.
It is also thought that the reduction in VAT could provide a boost to the economy by encouraging more people to spend on mobile phone goods and develop the domestic market.
Dorothy Ooko, Nokia communications manager for East Africa, said: "We believe that if Uganda does not remove VAT on its mobile phones then the Ugandan market will end up increasing parallel importation from Dubai and Kenya."
Neighbouring country Kenya recently announced in its national budget last month that it plans to scrap VAT on all mobile phones, cellular networks and telephones.
Monday July 20, 2009
A number of states in India have increased VAT rates, in a move that could increase prices for consumer electronic goods.
Gujurat, Rajasthan, Kerala and Uttar Pradesh have raised VAT by one to 2.5 per cent, meaning consumers will now have to pay a 12.5 per cent VAT rate on purchased goods.
India’s Consumer Electronics and Appliances Manufacturers’ Association said the hike could have a potentially adverse impact on the industry.
Suresh Khanna, general secretary of the association, told The Hindustan Times: "These four states contribute over 30 per cent of the total industry’s revenue and we expect this to drop by ten per cent due to the price increase."
The consumer electronics sector generates some 1,250 rupees for state governments, at a VAT rate of 12.5 per cent.
In related news, the Irish government was recently criticised by the European Court of Justice for failing to comply with European VAT legislation.
Wednesday July 1, 2009
An Indian state has increased the rate of VAT charged on mobile phones sold in the area.
The Maharashtra government has confirmed that the tax is to rise from four per cent to 12.5 per cent.
It is believed the decision will increase the cost of a handset priced at 3,000 rupees by 240 rupees, while reports suggest it may also encourage other states across the country to follow suit.
Talking to the Hindu News Update Service, Pankaj Mohindroo, president of the Indian Cellular Association said the move would have a major impact.
He explained: "The move is a lose-lose proposition for the government, industry, trade and consumer."
The Press Trust of India recently reported that biscuit manufacturers in India are seeking a cut in the rate of VAT charged on their products.
Friday June 26, 2009
A VAT exemption on aircraft transactions in the UK needs to be reconsidered, it has been revealed.
The European Commission has requested that the government looks again at its rules around the issue, as they differ from regulations included in the continent’s VAT directive.
According to the legislation, supplies of certain goods linked to aircraft can be exempt from the tax as long as they related to airlines that operate predominantly on international routes.
However, it is believed the UK’s own rules work on different criteria, including the weight of the aircraft and its design.
Details about the proposals have come after a poll by the Tenon Group revealed that a majority of businesses believe the government’s decision to cut VAT at the end of last year has had not positive impact on their operations.
