BDO Indirect Tax News

International - Indirect tax bytes

  • Canada: A bill that would temporarily increase the GST rental rebate on certain new purpose-built rental housing has received its first reading in parliament. If enacted, the relief will come in the form of an enhanced GST rental rebate for projects that begin construction between 14 September 2023 and 31 December 2030, where the construction is completed by the end of 2035 (click here for a tax alert prepared by BDO in Canada).
  • China: The government has extended the ability of R&D institutions (whether Chinese or foreign) to obtain a full refund of VAT paid on purchases of domestically manufactured equipment to 31 December 2027. Various requirements must be met to qualify for the refund.
          The stamp tax on securities is reduced by 50% from 0.1% to 0.05%, effective 28 August 2023.
  • Colombia: A ruling issued by the tax authorities on 13 September confirms that the transfer of real property as a result of the winding up of a company is subject to stamp tax.
  • Egypt: A recently published regulation allows the application of the 0% VAT rate on e-commerce transactions conducted outside the Egyptian territory if certain requirements are met. Guidance issued by the tax authorities on 4 September clarifies the rules applying to importers/exporters and taxpayers that use the electronic customs platform. In particular, affected parties must register under the e-invoicing system and issue e-invoices. Failure to comply will result in the non-deductibility of related expenses and the party will be prohibited from engaging in import or export activities.
  • European Union: The European Commission has published Frequently Asked Questions (FAQs) to address some practical challenges for payment service providers that will be subject to reporting obligations under the EU Payment Services Directive (click here for an overview of the FAQs prepared by BDO in Luxembourg).
  • France: The Finance Bill for 2024 includes a measure that would transpose the amended EU VAT directive into French law, specifically with respect to the special scheme for small enterprises and the regulation relating to administrative cooperation and the exchange of information for purposes of monitoring this scheme. The new rules will apply as from 2025.
  • Ireland: Budget 2024 announced on 10 October contains welcome VAT developments, including (i) extension of the temporary 9% VAT rate for the supply of electricity and gas for an additional 12 months, until 31 October 2024; (ii) an increase in the existing VAT registration thresholds from EUR 37,500 for services and EUR 75,000 for goods to EUR 40,000 for services and EUR 80,000 for goods; and (iii) a reduction of the VAT rate for audiobooks and e-books from 9% to 0%. In addition, the Revenue Commissioners will launch a public consultation on how Ireland can use digital advances to modernise the VAT invoicing and reporting system (click here for an analysis of the full budget 2024 announcement prepared by BDO in Ireland).
  • Italy: A law decree published on 29 September 2023 and that is effective on 30 September reduces the VAT rate on certain supplies of natural gas used for consumption in October, November and December 2023 to 5% (the super reduced VAT rate). The rate reduction applies to natural gas supplied for both domestic and industrial purposes. The law decree must be converted into law within 60 days of the publication date.
  • Japan: The tax reform package for 2024 includes a proposal to introduce “deemed supplier” obligations on online digital platforms that would require platforms to charge and remit consumption tax for transactions by nonresident traders selling to Japanese customers via the platform.
  • Luxembourg: A bill transposing the EU directive on requirements for payment service providers (PSPs) into domestic law was published in the official gazette on 2 August 2023 and will apply as from 1 January 2024. The new measures will require PSPs to submit records of payment data on a quarterly basis if, in a particular quarter, a PSP facilitates more than 25 payments related to cross-border supplies.
  • Malaysia: Budget 2024, presented by the prime minister on 13 October 2023, includes the following indirect tax proposals: (i) the service tax rate would be increased from 6% to 8% and its scope expanded to include logistics, brokerage and underwriting services; (ii) legislation would be enacted to introduce a luxury tax on certain high value goods at a rate ranging from 5% to 10%; and (iii) the excise duty rate on sugar-sweetened beverages would increase from RM 0.40 per litre to RM 0.50 per litre (click here for an analysis of the tax proposals in budget 2024 prepared by BDO in Malaysia). The tax authorities released two sets of updated e-invoicing guidelines on 29 September 2023 (e-Invoice Guideline (2.0) and e-Invoice Specific Guideline (1.0) that contain clarifications on the timeline for implementing e-invoicing in the country, along with other detailed information on taxpayer readiness and the process. E-invoicing will be implemented in Malaysia starting on 1 June 2024.
  • Maldives: The government is considering the introduction of a 4% tourism real estate tax on the long-term lease of tourist property (e.g., villas, rooms in tourist resorts, etc.) that would replace the GST that currently applies.
  • Oman: The tax authorities have announced that electric vehicles (EVs) and EV parts in the Sultanate are subject to a 0% VAT rate if certain conditions are fulfilled.
  • Romania: A recently published draft law includes the introduction of mandatory electronic invoicing through the “RO” system starting on 1 January 2024. The following persons would be required to issue and submit VAT invoices: (i) taxable persons established in Romania, whether or not VAT-registered, for B2B transactions involving the supply of goods and the provision of services in Romania; (ii) VAT-registered non-established taxable persons for B2B transactions where the place of delivery/provision is Romania; and (iii) and taxable persons, whether or not registered for VAT purposes, engaged in transactions with public institutions (other than transactions conducted in a B2G relationship).
  • Saudi Arabia: The tax amnesty scheme is extended to 31 December 2023. Taxpayers that regularise their tax compliance and payments can avoid financial penalties and fines.
  • South Africa: The tax authorities have released a discussion paper on the modernisation of the VAT system, an initiative that will impact VAT-registered businesses (and those required to be registered). Under consideration is the introduction of real-time or close to real-time transmission of VAT data from vendors to the tax authorities and the reporting of VAT data using the modern VAT return. Comments on the discussion paper must be submitted by 31 October 2023.
  • Sweden: The budget for 2024 includes a measure that would increase the turnover limit for a trader to be exempt from VAT from SEK 80,000 to SEK 120,000, as a result of which companies that apply the exception would no longer have to charge and report VAT on their sales. Also included in the budget proposals is a provision that would abolish the tax on plastic bags as from 1 November 2024 on the grounds that the tax has largely achieved its objective.
  • Tanzania: Finance Act 2023, which applies as from 1 July 2023, expands the scope of the definition of “electronic services” to include online intermediation and advertising services.
  • Uganda: Nonresidents providing electronic services are required to register and account for the 18% VAT when they meet an annual registration threshold of UGX 150 million. The scope of electronic services for these purposes is expanded to include advertising platforms, streaming platforms, cab-hailing services, cloud storage, data warehousing and any other service the Minister of Finance may prescribe in a statutory instrument. Nonresidents will be permitted to remit VAT to the Uganda tax authorities in USD to simplify compliance.
  • Uruguay: The reduced VAT rate of 13% that has applied to the tourism sector since the pandemic has been extended through 30 April 2024.