All the latest stories from the world of international and cross-border VAT.
The Polish tax authorities have published a draft law introducing the concept of split payments into Polish VAT legislation as of 1 January 2018.
In short, this new rule will allow for suppliers to set up alongside their normal bank account a special “VAT account”. Customers in B2B transactions will then have the option of paying the VAT they owe into this account instead of to the supplier’s account. The Polish tax authority will then take payment directly from this VAT account when the supplier’s normal VAT payment obligations arise.
The draft law indicates that the split payment regime will be voluntary, with the purchaser having a choice on whether to split the payments on an invoice by invoice basis. Any cash deposited in these VAT accounts will bear interest and be the taxable supplier’s asset, although it will be used solely for:
The Croatian Tax Authorities have requested, by letter to the European Commission, an authorisation to apply as of 1 January 2018 an increase the national VAT threshold to €45,000 (or the national currency at the exchange rate on the day of its accession).
The VAT threshold is currently €35,000. However, it must be noted that this threshold only applies to businesses established in Croatia, not those from other countries.
Raising the threshold is expected to reduce administrative burden and tax compliance costs for enterprises, as they will be relieved from a number of tax obligations such as filing of VAT returns or keeping VAT records. It is also anticipated that the increase of the threshold will simplify the collection of the tax and reduce the workload for national tax administration.
On 7 July 2017, the State Secretary for Finance submitted to the lower house of parliament a draft bill to amend the VAT treatment of vouchers.
The tax authorities would like the bill to be implemented into the VAT legislation with effect from 1 January 2019.
The proposed changes aim to eliminate some confusion about VAT on supplies and services using vouchers (e.g. stamps, vouchers and gift certificates).
EU Member States have failed to reach an agreement during the latest ECOFIN meeting on whether e-books should be eligible for the application of a reduced VAT rate, a VAT treatment which some physical books already enjoy.
The main issue blocking agreement stems from the definition of an e-book, which, unlike a physical book, is seen for VAT purposes as a service provided through electronic means and not as a good. Consequently, as the European Court of Justice has pointed out, e-books cannot be eligible for the application of the reduced rate as the reduced rate applies only in relation to physically stored books.
For some time now several EU Member States have been studying the option of introducing live reporting as a means to improve compliance and tackle tax evasion with some of them actually taking significant steps in this direction.
But it is the Eastern European Member States that have been at the forefront of the drive for more data being reported as they are plagued with relatively low rates of voluntary compliance and collection of VAT receipts compared to their Western counterparts.
Poland and Lithuania, for example are currently requiring tax payers to comply with SAF-T reporting while Romania has a introduced a similar regime in October 2016 with a heavily updated 394 form.
HMRC have published Spotlight 38 VAT: supply splitting tax avoidance schemes.
This is an occasional series where HMRC provides details on areas of taxation that it is looking at more closely. Since 2010 only 4 of the 38 documents published have been on VAT.
It has been confirmed by HMRC that MTD will apply to UK VAT returns from 1 April 2019.
VAT will however be the only tax subject to MTD at that stage, as other elements have been pushed back from original timescales.
It has recently been announced that changes to the Swiss VAT rules that will affect importers and sellers of low value items have been delayed for an additional year.
We previously reported on these changes here.
The VAT laws which will have effect in Saudi Arabia from January 2018 have been published here.
At the moment a translation is not available but it is expected to be published shortly.
The UAE is also introducing VAT at the same time, which means affected businesses do not have a great deal of time to start understanding its implications for them and taking steps to prepare. The other 4 GCC members have confirmed that they will not be introducing VAT until January 2019, one year later.
From the 1st of January 2018, some French VAT registered companies will be required to use a certified anti-VAT fraud software that meets new requirements.
According to paragraph 3 bis of Article 286 of the General French Tax Code, the companies concerned will be those registered for VAT in France which record their customers’ payments by means of accounting or management software or a cash register system.