Compliance Services

We previously wrote about the upcoming “Qualified Invoice system” for Japanese Consumption Tax (JCT), in which taxpayers are only able to claim input VAT from JCT registered vendors. All Japanese vendors intending to issue e-invoices must register with their local tax office before 31 March 2023.

In addition to this, the Japanese government is working on implementing the “Qualified Invoice” system using Peppol standards. Peppol is a common framework for trading partners to exchange standards-based electronic documents over the Peppol network.

EIPA (E-Invoice Promotion Association), established in July 2020, is the dedicated organization responsible for developing and building a simple-to-use electronic invoicing system for Japanese companies. The “Qualified Invoice” System will launch in October 2023, but businesses are encouraged to begin using Peppol-compliant e-invoicing software by October 2022.

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 Kingdom of Saudi Arabia has mandated e-invoicing Phase One (Generation Phase) since 4 December 2021, and Phase Two (Integration Phase) will come into effect on 1 January 2023. When the integration phase kicks off, taxpayers will be required to exchange their invoice data with the tax authority – ZATCA.

ZATCA has announced that it will offer to subsidize the purchase of e-invoicing software. In order to submit a request, taxpayers must provide certain detailed information and the invoice they received from the e-invoicing service provider. The “E-invoicing Subsidy Request” form can be accessed on the taxpayer portal.

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.

Saudi Arabia introduced VAT at a 5% rate in 2018. This was later tripled to 15% in 2020 to shore up finances hit by low oil prices, when the COVID-19 pandemic hit global demand.

The Saudi government has spent 1 trillion Riyals from the national reserves in the last five years. At the recent World Economic Forum 2022, the Minister of Finance, Mohammed al-Jadaan stated, “We will ultimately consider cutting the VAT but at the moment we are still replenishing the reserves”.

Additionally, the Minister has pointed out that the Kingdom is in the final stages of drafting its fiscal sustainability policy, which ensures the reverses do not fall below a certain percentage level of GDP.

As per the announcement on ZATCA’s portal dated 24 June 2022, implementation of Phase Two (Integration Phase) of the E-invoicing project will begin on 1st January 2023 with selected taxpayers in the first wave. Resident companies with over SAR3 billion in taxable turnover in 2021 will be included in the first wave and should comply with the Phase 2 requirements.

ZATCA will begin to inform and communicate with the targeted taxpayers to complete procedures for implementing Phase Two (Integration Phase) of E-invoicing.

The CFDI 4.0 and the Payment Receipt 2.0 in Mexico has once again been postponed and will now become mandatory to use on 1^st January 2023.

CFDI 3.3 will not be compliant from 1^st January 2023 onwards, which means that it will be rejected on and after this date. To this effect, it’s imperative that businesses are prepared to accommodate CFDI 4.0 in advance of 1^st January 2023 onwards.

Tungsten is now live with CFDI 4.0 and the associated Payment Receipt.

Our Web Form facility supports both CFDI 3.3 and CFDI 4.0 – so you can use any version as preferred up until 31 December 2022.

If Integrated Suppliers want to use the new CFDI 4.0 version, they will need to contact our Support team on www.tungsten-network.com for the re-work of their profile.

The post-Covid recovery appears to be slow in nature, as reflected through the extension of reduced rate many countries are deploying.

Greece has announced a third extension of the VAT rate on certain products, from 24% to 13%. These products include:

• coffee;
• transport;
• non-alcoholic drinks;
• cinemas;
• gyms and dance schools; and
• tourism packages.

The VAT rate was first reduced on 30 June 2020, and subsequently extended on 1 October 2021 and again on 30 June 2022.

The reduced rates are expected to last until 1^st January 2023.

Slovakia has now delayed plans to implement e-invoicing in the country. The new revised timeframes are as follows:

• June 2022: a test phase
• January 2023: first phase for B2G, G2G and G2B transactions

The second phase is also expected to start in 2023 and will be extended to also include B2B and B2C transactions.

Country VAT rates are under constant revision and review. The High Council of Finance in Belgium has indicated that it is contemplating increasing the VAT rate to 22%.

This is by no means definitive, but Tungsten Network will keep up to date with any developments and incorporate any new rates in our system.