BDO Indirect Tax News

International - Indirect tax bytes

  • Anguilla: The tax authorities announced on 20 February 2024 that residential property will no longer be subject to property tax and residential property owners will not receive demand notices for 2024. The exclusion does not apply to residential property classified as long-term rental houses, apartments or condominiums.
  • Bahrain: The record retention period for VAT purposes has been extended for an additional five years, i.e., to 10 years.
  • Belgium: The law on mandatory B2B e-invoicing was enacted on 20 February 2024 and will apply as from 1 January 2026.
  • Bulgaria: The country is expected to introduce mandatory e-invoicing for B2B transactions as from 2026.
  • Cyprus: The government has wrapped up a consultation on two bills that would reform the green tax rules, including the introduction of a carbon tax on energy products, which currently are exempt from excise duties and VAT on products subject to the carbon tax. If adopted, the carbon tax would apply as from 1 April 2024.
  • Ecuador: An executive decree issued by the president on 15 March increases the standard VAT rate to 15% for calendar year 2024, starting on 1 April. The rate had been increased from 12% to 13% in a law published in the official gazette on 12 March.
  • Estonia: On 6 March 2024, the government proposed the introduction of a tax on sweetened beverages that would apply as from 1 January 2025.
  • European Union: On 15 March 2024, the EU member states reached a compromise on the final wording of the Corporate Sustainability Due Diligence Directive. The directive imposes obligations on companies to address negative impacts caused by business activities from both an environmental and human rights perspective and aims to ensure that companies make an active contribution to sustainable development through proper management of their supply chains and business operations. It also introduces a requirement for companies to exercise due diligence with respect to environmental and social issues, which includes integrating social and environmental responsibility into their policies, identifying and assessing risk, preventing and mitigating negative impacts, monitoring the effectiveness of measures and communicating results (for an overview of the directive, see the analysis prepared by BDO in Poland)
    The European Parliament has adopted its position on the proposal for revamping the EU Customs Code. The reform proposals, first announced by the European Commission in 2023, would modernise and simplify the code by taking into account factors such as the
    increase in trade volumes, particularly in e-commerce and EU standards that must be checked at the border, and geopolitical realities (for prior coverage, see the article in the July 2023 issue of Indirect Tax News).
  • Finland: The government announced on 16 April 2024 that the standard VAT rate would be increased from 24% to 25.5% as part of a package of measures to finance the country’s fiscal deficit.
  • France: A decree published on 27 March 2024 confirms the postponement of e-invoicing and reporting rules (for prior coverage, see the item in the Bytes column in the January 2024 issue of Indirect Tax News) to 2026 or 2027, depending on the size of the business.
  • Hong Kong: The 2024/25 budget speech delivered by the Financial Secretary on 28 February 2024 includes several indirect tax measures, including cancellation of the special stamp duty, buyer’s stamp duty and residential stamp duty, the introduction of a 3% hotel accommodation tax and an increase in the annual business registration fee by HKD 200 to HKD 2,200 (for an analysis of the budget measures, see the tax alert prepared by BDO in Hong Kong).
  • Iceland: The accommodation tax, which was suspended during the COVID 19 pandemic, was reintroduced on 1 January 2024 with an expanded scope (bringing cruise ships within the scope of the tax) and a new tax registration requirement.
  • Indonesia: The VAT incentives on the sale of electric vehicles and buses under which the government bears a significant portion of the VAT due on the sales has been extended for an additional year through December 2024. The incentives initially were granted for six months in 2023 (i.e., April – December) (for prior coverage, see the item in the Bytes column of the April 2023 issue of Indirect Tax News) and aimed to encourage the purchase of EVs and mitigate the impact of fossil fuels on the environment. A new regulation released on 15 February 2023 provides for the same benefits, i.e., a 1% VAT applies to four-wheeled battery-powered electric motor vehicles and buses with at least 40% locally manufactured components, with the remaining VAT of 10% borne by the government) and a 6% VAT applies to battery-powered electric buses with 20% to 40% locally manufactured components, with the remaining VAT of 5% borne by the government.
  • Isle of Man: The VAT registration threshold increased from GBP 85,000 to GBP 90,000 (although businesses with taxable turnover below the threshold can register voluntarily) and the deregistration threshold increased from GBP 83,000 to GBP 88,000 as from 1 April 2024. Taxpayers exceeding the GBP 90,000 threshold must register and account for VAT on their taxable supplies. The increases were announced in a press release dated 28 March.
  • Israel: The introduction of mandatory e-invoicing has been delayed until 5 May 2024. Originally scheduled to become effective on 1 January 2024, the launch was postponed until 1 April and now is moved to May. The e-invoicing requirements will apply to transactions of NIS 25,000 or more.
  • Laos: The 10% standard VAT rate was reinstated on 19 March 2024 and became effective 3 April. The rate had dropped to 7% in 2022 due to the COVID-19 pandemic.
  • Malaysia: The Inland Revenue Board published updates to the e-invoice guidelines on 6 April 2024.
  • Morocco: The Ministry of Finance published a circular on 9 February 2024 that revised the VAT treatment of remote services provided by a nonresident. This follows from changes included in the Finance Law for 2024, which amended the VAT territoriality rules to tax digital service transactions based on the place where the consumer is resident and to introduce registration and compliance requirements on nonresident providers of digital services. Nonresident service providers must declare monthly turnover from the provision of digital services to nontaxable consumers and pay the relevant tax to the Moroccan tax authorities. Such providers also are required to retain documentation about services provided for 10 years and make it available to the tax authorities upon request.
  • Namibia: The mandatory VAT registration threshold increased from NAD 500,000 to NAD 1 million; no changes are made to the voluntary registration threshold of NAD 200,000.
  • Philippines: The government has proposed VAT compliance obligations on nonresident digital service providers that would require such providers to assess, collect and remit VAT on transactions through their platforms. Digital service providers for these purposes would be those supplying online licensing software, website filters and firewalls, mobile applications, video games, webcast and webinars; digital content (e.g., music, files, images, text and information); electronic marketplaces; search engine services; social networks; cloud storage services, online newspapers and journal subscriptions; and payment processing services, etc.
  • Poland: An administrative court has ruled that a storage tank cannot be considered a building structure as referred to in the Act on Local Taxes and Fees because it does not meet the definition of a “building structure” in the Building Law since the tank was not constructed using building products as part of a construction process. According to the court, structures that are not constructed using building products, but rather are produced outside the development area as part of a production process and only transported to the destination do not meet the criteria of a building structure and, therefore, they remain outside the scope of the property tax (click here for an analysis of the decision by BDO in Poland).
    The authorities have determined that a trader who resumes suspended business activities is not treated as a VAT-taxable person who is starting such activities, but rather as one continuing the activities. As a result, the PLN 200,000 VAT registration threshold, below which a trader is exempt from VAT, applies to the trader in full, irrespective of the suspension of business activities during the tax year and their subsequent resumption. The suspension does not reduce the amount of the VAT exemption limit.
  • Romania: An ordinance that applies as from 29 March clarifies the penalties for noncompliance with the e-invoicing rules that became effective on 1 January 2024. Taxable persons established in Romania and those not established but registered for VAT purposes in Romania must issue invoices through the “Ro e-Factura system” for all B2B deliveries with the place of supply in Romania (for prior coverage, see the item in the Bytes column in the January 2024 issue of Indirect Tax News). Under the ordinance, the “no penalty” period for invoices issued through the Ro e-Invoice system is extended from 31 March to 31 May 2024 and failure to transmit e-invoices in a timely manner (i.e., within five business days after issuance) will be subject to penalties based on the number of months of noncompliance rather on the number of transgressions.
  • Saudi Arabia: New regulations for the collection of Zakat, published on 22 March 2024 and that apply to fiscal years starting on or after 1 January 2024, clarify and consolidate previous regulations.
  • South Africa: As announced in budget 2024 on 21 February 2024, the government intends to revise and update the Electronic Services Regulations (and relevant sections of the VAT Act) to keep pace with changes in the digital economy and ease administrative burdens. The scope of the regulations should be limited to nonresident vendors supplying electronic services to nonvendors or end consumers. To facilitate compliance, it is proposed that suppliers of electronic services be required to appoint a representative, but the requirement that such person reside in South Africa would be waived while maintaining the exemption from opening a South African bank account. It is also recommended that the dispensation be granted to nonresident vendors with no, or a limited, presence in South Africa in specified circumstances.
    The South Africa Revenue Service issued a ruling on 27 November 2023 that clarifies the method to be used to determine the apportionment of VAT incurred on goods and services acquired partly for making taxable supplies and partly for some other purpose. The ruling sets out the standard turnover-based method for determining the ratio and is more detailed than previous versions of the ruling (for an analysis of the ruling, see the tax alert drafted by BDO in South Africa).
  • Sri Lanka: The standard VAT rate increased from 15% to 18% and the VAT registration threshold dropped from LKR 80 million for a 12-month period and LKR 20 million per taxable period to LKR 60 million for a 12-month period and LKR 15 million per taxable period. These changes apply retroactively as from 1 January 2024.
  • Sweden: The Ministry of Finance released a proposal on 21 March that would increase the turnover limit for VAT registration from SEK 80,000 to SEK 120,000 and would allow companies established in other EU member states to apply this threshold in Sweden. If adopted, the measures would apply as from 1 January 2025.
  • Thailand: A royal decree approved by the cabinet extends VAT exemption on the transfer of cryptocurrencies and digital tokens on exchanges indefinitely.
  • United Kingdom: HM Revenue and Customs and HM Treasury published a consultation document on 21 March 2024 requesting feedback on the government’s plan to introduce a carbon border adjustment mechanism (CBAM) on specific carbon-intensive goods as from 2027. The document sets out the proposed tax that would apply to carbon emissions embodied in imported goods in the aluminum, cement, fertilizer, glass, hydrogen, and iron and steel sectors, how the government is planning to design the CBAM, how tax would be calculated, and administrative and compliance obligations. The U.K. carbon tax would be designed to be in line with the EU CBAM, whose first phase became effective in October 2023 (for prior coverage, see the article in the October 2023 issue of Indirect Tax News). The UK consultation will run through 13 June 2024.
    The VAT registration threshold increased from GBP 85,000 to GBP 90,000 on 1 April 2024 and the 12-month taxable turnover threshold that determines whether a person may apply for deregistration increased from GBP 83,000 to GBP 88,000.
    Also effective 1 April 2024, the Plastic Packaging Tax rate increased from GBP 210.82 to GBP 217.85 per tonne following a rate increase in 2023. Businesses must pay the PPT if they have manufactured or imported plastic packaging components that contain less than 30% recycled plastic and registration also may be required. The PPT became effective on 1 April 2022 (for prior coverage, see the item in the Bytes column in the April 2022 issue of Indirect Tax News).
  • Zambia: The tax authorities recently announced that mandatory e-invoicing will apply for all VAT-registered taxpayers as from 1 July 2024.
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