International - Indirect tax bytes

  • Bahamas: As from 1 July 2023, vacation home rentals and related services are subject to VAT and Bahamian companies with annual turnover exceeding BSD 5 million must file VAT returns and pay tax due within 14 days.
    As part of a steep increase in the Bahamian passenger tax (from USD 18 up to USD 30 or USD 32), a USD 5 tourism environmental levy and USD 2 tourism enhancement levy will apply to every cruise ship entering or leaving the Bahamas and every passenger arriving or leaving the Bahamas, respectively. While the original proposal was for the increased passenger tax and the environmental levy would apply as from 1 July 2023 and the enhancement levy as from 1 January 2024, the effective tax of all three measures has been postponed to 1 January 2024.
  • Costa Rica: As from 1 July 2023, tourism services provided by registered persons (e.g., tour operators, travel agencies, tourism transport companies) in the country are subject to a 13% VAT (up from 8%).
  • Cyprus: A recent decree temporarily reduces the VAT rate to 0% for certain basic items, which will apply through 31 October 2023.
  • Estonia: The standard VAT rate will increase from 20% to 22% on 1 January 2024, and as from 2025, the rate on accommodations will jump from 9% to 13% and the rate on newspaper and magazine publishing will go up to 9% from 5%.
  • European Union: Several EU member states have not yet transposed the DAC7 directive into their domestic law (the deadline was 31 December 2022), so on 14 July 2023, the European Commission initiated the second stage of an infringement procedure and sent a reasoned opinion to Belgium, Cyprus, Greece, Poland and Portugal about their failure to communicate the domestic measures. The Commission also closed the infringement procedure against Slovenia. DAC7 requires digital platforms that allow taxpayers to sell goods, offer personal services or rent immovable property or means of transport to report those taxpayers and their economic activities (for prior coverage, see the article in the July 2021 issue of Corporate Tax News). The five member states have two months to respond, after which the Commission can refer the case to the Court of Justice of the European Union.
  • Hungary: Hungary may exempt from VAT taxable persons whose annual turnover does not exceed the equivalent of EUR 71,500 (increased from EUR 48,000). The Council of the European Union granted this derogation in a decision published on 23 May 2023; a previous authorisation to apply a higher threshold than that prescribed in the VAT directive was granted in 2022.
  • Italy: The 5% super reduced VAT rate on natural gas used for domestic and industrial purposes and thermal energy produced with natural gas is extended to apply to supplies accounted for in invoices relating to consumption in July, August and September 2023.
  • Kenya: All suppliers providing imported digital services (via the internet, an electronic network or a digital marketplace) must register for VAT purposes in Kenya regardless of whether the supplier meets the annual turnover threshold of KES 5 million for VAT registration. Registration—which can be undertaken through a simplified system—must take place within 30 days after the date of the supply.
  • Nigeria: The Federal Inland Revenue Service (FIRS) issued guidelines on 3 March 2023 on the withholding and self-accounting of VAT.
    The president has suspended the 5% excise tax on communications services, after it was recently announced that the tax would be reinstated, following suspension earlier in 2023 (for prior coverage, see the item in the Bytes column in the April 2023 issue of Indirect Tax News).
  • Poland: The law amending the VAT Act and introducing the SLIM VAT 3 package has been published, with the measures generally applying as from 1 July 2023 (for prior coverage, see the article in the October 2022 issue of Indirect Tax News). The changes include an increase in the annual sales limit to qualify as a “small taxable person” and an easing of the requirements to obtain a quick VAT refund by taxpayers making cashless transactions.
    On 18 May 2023, the president signed a law that transposes the EU directive on payment service providers (PSPs) into domestic law. The new reporting obligations will apply to PSPs where cross-border payments relating to e-commerce transactions originate from EU member states starting on 1 January 2024.
  • Turkey: A Presidential Decree that applies as from 10 July increased both the standard and reduced VAT rates. The reduced rate of 8% is increased to 10% or 20% for specified personal hygiene items and basic necessities and the standard rate of 18% is increased to 20%.
  • Uganda: On 12 July, the parliament approved the draft law to introduce a 5% digital services tax on the revenue of nonresidents that provide electronic services to persons in Uganda, i.e., where the services are delivered via the internet, an electronic network or an online platform. Notably, Uganda already requires foreign digital service providers to account for VAT at 18%.
  • Vietnam: The standard VAT rate of 10% is reduced to 8% for the period 1 July through 31 December 2023.

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