In the past few months, we have communicated that in Portugal, a PDF can, in certain instances, qualify as an electronic invoice.
The requirement to include a digital signature has yet again been delayed, further to Order 49/2022. Portugal has delayed this requirement several times.
This means that now from 1st January 2023, PDFs will have to include a Qualified Electronic Signature (QES).
VAT grouping is often deployed in the UK when two or more eligible taxpayers are treated as one ‘person’ for VAT purposes. This can bring multiple advantages, including avoiding the need to pay VAT when transacting between members of the same group, and less cumbersome VAT-related administrative obligations.
UK VAT groups can currently contain members established in both Great Britain and Northern Ireland.
Supplies between members of a VAT group generally are disregarded for VAT purposes.
However, further to VAT notice 700/2, specifically section 7.3.2, when goods now move from Great Britain to Northern Ireland, VAT will now be due. This will be calculated in the same way as when a business moves its own goods.
Further to the consultation on the implementation of the Organisation for Economic Co-operation and Development (OECD’s) Model ‘Reporting rule for digital platforms’, the UK government has announced that new UK reporting requirements will be introduced.
These will take effect from 1st January 2024, with first reports expected to be submitted by the end of January 2025.
There has been a substantial amount of feedback during the consultation. HMRC is collating this and striving to publish the government response to the consultation along with draft regulations providing details of the new regime.
To ensure implementation of the regulations is in a ‘proportionate and effective manner’, HMRC will engage with digital platforms and their providers before the regulations come into effect. It is hoped this prior interaction between the regulatory bodies and digital providers will engineer a smooth adoption of the regulations.
Coalition parties have been putting forward the proposal to reduce VAT on fruits and vegetables.
As we have seen with ‘green’ initiatives both in Europe and globally, fiscal measures are often intrinsically linked to social and political reforms. Coalition parties in the Netherlands are hoping that reducing VAT will help curb obesity and other health-related illnesses in the country.
Proposals for a reduced rate are yet to be carved into law and are currently being discussed.
Tungsten Network is continually reviewing tax rate changes in Europe. The Tungsten Web Form facility currently includes the option to select all valid Dutch VAT rates. We will ensure that any new valid VAT rates, if applicable, will be integrated as part of our portal solution.
Romania has one of the largest tax gaps Europe. In 2019, it saw 34.9% of its VAT revenues disappear. To counter this, Romania is deploying several fiscal measures to drastically reduce the VAT gap.
The B2G mandate and upcoming B2B e-invoicing mandate on 1st July 2022 relating to high-risk fiscal product is viewed as a significant measure to achieve this aim.
In addition to the e-invoicing mandate, the operation of the reverse charge mechanism also serves to reduce the VAT gap. This is where the responsibility to pay tax shifts from the supplier to the buyer.
To this effect, the domestic reverse charge in Romania has been extended until 2026 on the following products:
Both the seller and buyer must be Romanian taxpayers for the reverse charge to apply.
We have recently communicated about the upcoming partial e-invoicing mandate in Romania, where high-risk fiscal B2B transactions will need to be cleared through the Romania e-invoicing platform, the RO e-Factura.
However, Romania wants to advance its e-invoice mandate yet further- it has requested approval from the European Council for a derogation from the VAT Directive articles 178, 218 and 232 for mandatory transmission of all B2B invoices through the RO e-Factura system.
Tungsten is already assisting its suppliers and buyers with the upcoming partial mandate in Romania, and we will continue to monitor developments in the country regarding the derogation.
The French Tax Authorities have issued an updated version of the FAQs on electronic invoicing.
The latest version of the FAQs is available here.
The introduction of new VAT groups in Poland was expected to come into effect on 1st July 2022. However, there are indications that the applicable legislation will not be enacted in time.
It is envisaged that the introduction of new VAT groups in Poland will now take place from January 2023.
If so, this may affect the changes to the VAT-R form in Poland referred to below.
The Malaysian government implemented GST in 2015, replacing the existing SST system, as part of its tax reform program to enhance the capability, effectiveness and transparency of tax administration and management. GST was, however, abolished in 2018 when the Pakatan Harapan government took over the reins, due to the public widely views GST as having contributed to a spike in living costs. The country has since returned to the SST system.
In a recent interview, current Prime Minister Datuk Seri Ismail Sabri Yaakob revealed the intention to reintroduce GST as the country has lost RM 20 billion (Est 4.5 billion $) in revenues when the GST was abolished and replaced with the old SST. he explained that the government is aware of the perception of GST however has limited options for replenishing the country’s coffers.
The Prime Minister reassured the nation that the GST reintroduction would be handled carefully. The government will aim for a GST rate that is not so high as to burden the people, nor too low that it “defeats the purpose of expanding tax revenue”, and to formulate ways to educate the public on the importance of GST and transparent tax collection.
The Zakat, Tax and Customs Authority (ZATCA) announced an initiative to ease the blow of the COVID-19 outbreak on businesses by cancelling fines and exemption from financial penalties for all taxpayers, starting June 1, 2022, and ending November 30, 2022.
According to the Authority, the fines covered by the exemption include fines for late registration in all tax systems, late payment, late filing of returns fines in all tax systems, and fines to correct VAT returns, as well as fines for violations of VAT field control related to applying the e-invoicing regulations and other general regulations.
ZATCA encourages taxpayers to view the details of the schemes through the simplified guideline on its website and urges all taxpayers to benefit from the initiative during the allotted time.
Last month we communicated how countries in Europe, specifically the Benelux countries, were embarking on joint ventures with the aim of reducing VAT fraud.
The European Commission aims to establish a similar incentive with Norway, with the same underlying objective- to reduce the VAT gap.
This is a unique development- it is the first ‘alliance’ of its kind with a non-EU country.
As part of the agreement, tax authorities in both the EU and in Norway can share tax information and partake in activities to help fight VAT fraud similar to those outlined in the EU.
A recommendation from the European Commission plans to extend this joint initiative yet further, proposing new methods to further reinforce barriers against VAT fraud.
Reduction of the VAT gap is the primary objective of e-invoicing mandates, which are expected to be implemented with increasing frequency in the coming years in Europe. By extension, we can envisage the European Commission, and countries of their own initiative, to instigate measures to further reduce the VAT gap in a streamlined and efficient manner.
Vietnam’s General Department of Taxation (GDT) has launched a web portal for foreign suppliers involved in cross-border business activities in Vietnam. The web portal allows cross-border businesses to register, declare, and pay tax without submitting any physical paperwork to the Vietnamese tax authorities.
Through this new portal, foreign cross-border businesses will be able to pay their taxes directly instead of relying upon a third party. The Vietnamese government also seeks to address the shortfall in tax collection, particularly from foreign businesses on Vietnam-sourced income.
An overriding objective relating to the implementation of e-invoicing has always been to reduce VAT fraud. A specific means to achieve this is through the reverse charge mechanism.
The reverse charge mechanism is where liability to pay the VAT shifts to the buyer rather than the supplier.
This is important, as cross-border transactions in theory, by virtue of intra-community supplies, should be subject to zero VAT. However, to exploit this, it is possible to sell goods / services domestically, charge and then pocket the VAT. The reverse charge counters this as responsibility to pay VAT lies with the buyer, and not the supplier.
It has been proposed that this is extended until 31 December 2025.
The duration of the public consultation in the digital age has been extended until 5 May 2022.
Electronically recording sales is accompanied by several administrative burdens. Furthermore, the main reason for the introduction of electronically recording sales- cash payment / sales- are decreasing. In fact, non-cash payments are projected to reach 80% by 2025, further reducing the need for electronically recording sales. This phenomenon is taking hold not just within the parameters of the EU but globally too.
To this effect, the proposal to abolish the electronic sales recording has been approved by the Czech government.
It is expected that the Act on the Registration of Sales, which introduced the obligation for electronic sales recording, will shortly be cancelled.
In Portugal, under certain circumstances, a PDF invoice can qualify as an electronic invoice. The Covid-19 pandemic has meant that many countries around the world have had to deal with challenges in the management of their fiscal operations. Part of these challenges have involved governments acknowledging that they must provide some concessions to taxpayers.
During much of Covid, PDF invoices were made available to clients, despite not meeting the stringent requirements to qualify as an invoice.
During the following periods, it was / is permitted that PDFs can qualify as e-invoices, despite not meeting stringent requirements:
This means that up to 30 June 2022, PDFs can be accepted as e-invoices without the need to meet any specific requirements.
At all other times, the PDF must be digitally signed to be accepted as an e-invoice.