China: The Ministry of Finance and State Taxation Administration have announced the VAT treatment of small-scale taxpayers (i.e., taxpayers with business revenue of less than CNY 5 million in the last 12 months) for calendar year 2023. Small-scale taxpayers with monthly sales of less than CNY 100,000 (down from CNY 150,000 during the period 1 April 2021 through 31 December 2022) are exempt from VAT. Small-scale taxpayers that are subject to the 3% VAT levy benefit from a reduced rate of 1% (previously exempt).
Colombia: The tax reform enacted on 13 December 2022 contains measures that broaden the scope of the carbon tax to include the sale, self-consumption and import of coal (subject to some exceptions); and introduce an excise tax on single-use plastic used for packaging and wrapping, as well as excise taxes on sugar-rich drinks and specific processed food products.
Denmark: The government has launched a public consultation on the VAT in the Digital Age initiative (see the article in this issue). Comments must be submitted by 24 January 2023.
Ghana: The budget for 2023 presented on 24 November 2022 includes a measure that would increase the standard VAT rate from 12.5% to 15%.
Italy: The effective date of the sugar and plastic taxes is deferred to 1 January 2024. In another development, two recent rulings issued by the tax authorities address the VAT registration and VAT representative requirements for nonresidents. With respect to the latter, the ruling clarifies
Malta: An information note published by the tax authorities in November 2022 clarifies that e-commerce operators, i.e., persons engaged in activities where they take orders from customers (e.g., through social media pages or groups) for the purchase of goods from third-party online websites and purchase the goods in their own name and subsequently sell the goods to end customers, are subject to VAT on such sales. These persons must register for VAT purposes in Malta.
OECD: A report released on 30 November 2022 on consumption tax trends notes that consumption tax revenues have decreased, mainly due to the diminishing importance of taxes on specific goods and services as a share of total taxation in OECD countries, on average. VAT is the main category of consumption taxes, generating almost three times as much tax revenue as excise duties that form the bulk of taxes on specific goods and services. The report notes that all OECD countries that have a VAT regime have implemented (or committed to implement) the OECD standards for the collection of VAT on online sales of services and digital products from nonresident e-commerce vendors and most OECD countries have implemented some type of electronic transaction information reporting obligation, requiring the transmission of detailed information in an electronic format on individual taxable transactions.
Philippines: A bill approved by the House of Representatives on 14 November 2022 clarifies that the 12% VAT rate applies to the supply of electronic or digital services by nonresident suppliers (and not resident suppliers). Digital services are those provided over the internet or other electronic network and cannot be delivered without the use of information technology (e.g., digital advertising, etc.). As a result, nonresident digital service providers will be required to register for VAT purposes and collect and remit VAT on relevant transactions. The house also approved a bill that will impose an excise tax on single-use plastic bags.
Spain: The new plastic tax applies as from 1 January 2023 and rules for registration, reporting, recordkeeping, etc. have been approved (for prior coverage, see the article in the January 2022 issue of Indirect Tax News).
Sri Lanka: Effective 22 December 2022, the VAT registration threshold is reduced from LKR 75 million per taxable quarter or LKR 300 million per year to LKR 20 million per taxable quarter or LKR 80 million per year. The reduction applies to taxpayers whose taxable supplies exceeded LKR 20 million for the taxable period that commenced as from 1 October 2022 and that were required to register before 28 December. Other taxpayers must register for VAT within 15 days from the date the value of taxable supplies exceeds or is likely to exceed LKR 20 million for a taxable quarter or LKR 80 million for a 12-month period.
Turkey: The amount of the special telecommunications tax on mobile phone subscriptions for 2023 is TRY 260.
United Arab Emirates: On 5 December 2022, the Federal Tax Authority (FTA) launched an enhanced platform (“Emara Tax”) that aims to improve the way taxpayers access the FTA’s services, pay their taxes and obtain refunds. The platform enhances the FTA’s ability to administer taxes in the UAE, enables better and faster decision-making, as well as earlier engagement with taxpayers that need support.
United States: On 22 December 2022, the Senate Finance Committee announced it is launching a probe into allegations of the use of forced labour against eight major automakers (including foreign-owned manufacturers). The automakers may have procured parts and materials from suppliers using forced labour in the Xinjiang Uygur Autonomous Region (Xinjiang) in China—an area where forced labour is widespread—in violation of U.S. federal trade and customs law (for prior coverage, see the tax alert dated 5 January 2023 and the article in the June 2022 issue of Indirect Tax News).