Compliance Services

The Isle of Man fiscal structure is virtually identical to that of the United Kingdom – and so it isn’t surprising to see that the Isle of Man Treasury have published some guidance on the UK Plastic Packaging Tax (PPT).
This guidance includes a link to the UK HMRC website, which provides detailed information relating to PPT. The link can also be accessed here.

Luxembourg is making significant progress with B2G e-invoicing, and has set out a timeframe for B2G e-invoicing in the country.
As with many other countries, the underlying aim is to introduce greater transparency within the tax authority domain, as well as improving efficiency of the transactions with the public sector.
Companies will be obliged to send invoices to government institutions via the PEPPOL Network.
The tax authority has acknowledged that this will instigate a radical overhaul in the way people work- and have therefore responded by outlining a phased approach for implementation, in line with the following:
• Large companies- mandatory to use e-invoicing from 18 May 2022;
• Medium companies- mandatory to use e-invoicing from 18 October 2022;
• Small companies: mandatory to use e-invoicing from 18 March 2023.
It is hoped that the phased implementation will allow companies to adapt their working models to accommodate B2G e-invoicing.

New e-archiving obligations were introduced in Italy on 1st January 2022. These new obligations relate to the training, management and storage of documents issued by the Agency for Digital Italy, as well as specific information relating to metadata. These guidelines replace previous archiving regulations on the storage of tax documents. Tungsten Network is compliant with all archiving obligations further to the introduction of these changes.

In the Italian 2022 budget, which has now been approved, Italy has delayed a tax to be applied to both plastic and sugar until 1st January 2023.
In the budget, Italy has also stated that gas for domestic and industrial production is cut to 5% between 1 January and 31 March 2022. This continues the 5% reduced rate that was applied from October 2021 to December 2021.
With inflation a widespread concern across Europe, we can expect other European states to adopt similar measures.

The last two years have shown the dramatic effect of the Covid-19 pandemic on the tax world. VAT-related measures as a direct result of the pandemic still continue.

Italy introduced Decree Law No 215, which states that any goods and services supplied to the government under EU law, will be exempt from VAT, if these goods and services are used to combat Covid-19.

The Romanian government published Emergency Ordinance number 130/2021 on 18 December 2021, which states that ‘high fiscal risk products’ must soon be issued through the RO e-Factura. The Emergency Ordinance provides a few key dates:
• A voluntary phase from 1st April 2022 to 30 June 2022;
• This then becomes mandatory from 1st July 2022.
The requirement to issue B2B invoices through the RO e-Factura is currently optional- and both the supplier and the buyer must be registered through the RO e-Factura to do so. However, requirements will be much more demanding from 1st July 2022 for transactions involving high risk fiscal products – these must be issued through the RO e-Factura, regardless of whether the buyer is registered in the RO e-invoice registry or not.
Affected taxpayers must ensure that they have the technical infrastructure to issue invoices in XML format, in accordance with the technical and usage specifications of the RO_CIUS electronic invoice in Romania.
The National Agency for Fiscal Administration (ANAF) have provided 5 categories that come under the definition of a high-risk fiscal product- these are fairly wide in scope:
• Certain foods (including fruit and vegetables, amongst others)
• Alcoholic beverages
• New constructions
• Mineral products
• Clothing and footwear
ANAF plans to update this list regularly.
Tungsten is monitoring developments in Romania and what this means for our solution.

Zakat, Tax and Customs Authority (ZATCA) announced violations and penalties of the first phase of e-invoicing (Generation Phase), which took effect on 4th December 2021.

Businesses who fail to issue and archive electronic invoices are subject to a fine between SAR 5,000- 50,000. In addition, the authority may issue a warning for not including the QR code on simplified tax invoices, not including the VAT registration number on the e-invoices where required, and failing to inform ZATCA of any malfunction that hinders the issuance of e-invoice. Amendment and deletion of e-invoices after issuance will also trigger a fine between SAR 10,000 – 50,000.

ZATCA has also clarified that all fines are applied depending on the types of violation and the number of times it has been committed. The penalties for first-time violations are likely to be modest, while repeat violations will attract higher fines.

China has launched a new pilot programme introducing “Fully digitalized e-invoice”, this is an important initiative to comprehensively promote the digital upgrade and intelligent transformation of tax collection and management, with the goal of achieving 100% invoice digitalization across the country by 2025. The pilot was first implemented on 1st December 2021, with selected taxpayers in Shanghai, Guangdong, and Inner Mongolia.

There are two types of fully digitalized e-invoice: fully digitalized special VAT e-invoice and fully digitalized general VAT e-invoice, which have the same legal effect as the paper invoice and the normal e-invoice currently in use. To remind you of the differences between General and Special VAT invoices:

• General VAT Invoice: This invoice type does not allow for VAT deduction and is typically used for B2C and tax-free transactions. The General VAT Invoice is a simplified invoice type and paperless has been allowed for years for general VAT invoices
• Special VAT Invoice: This invoice types allows for VAT deduction, and is typically used for B2B transactions

A major upgrade in this pilot is the elimination of special tax control equipment (e.g. UKEY), pilot taxpayers will instead use a national unified e-tax service platform to issue, deliver and validate e-Fapiao24/7 for free. Once the invoice data is entered in the system, the platform will issue a unique invoice number, meaning that taxpayers no longer need to apply for invoices via their local tax bureau. In addition, this platform creates a Tax Digital Account for each taxpayer, which automatically collects invoice data, allowing taxpayers to search, print, and download invoices from the platform.
The e-tax service platform aims to serve as a one-stop shop for all invoicing needs, it will be also available in the form of software and mobile app in the near feature. Furthermore, this pilot has abolished the OFD file format requirements, pilot taxpayers can send the fully digitalized e-invoice through their Tax Digital Account, QR code, or by email.

While fully digitalized e-invoice is still in the pilot stage, we expect widespread promotion and implementation soon. It is recommended that enterprises continue to pay close attention to the latest developments and evaluate the potential impact on their business. Of course, Tungsten Network will stay close to China’s e-invoicing pilots, and we will keep you up to speed.

In an interview published in Qatar’s Al Sharq newspaper on 7 November 2021, the President of Qatar’s General Tax Authority, Mr. Ahmad Eissa Al Mohannadi, confirmed that the country is still determined to introduce VAT as per the GCC Unified VAT Agreement that was signed by all GCC member states in June 2016.

In accordance with the GCC Framework, Qatar will introduce VAT with two rates: standard rate (5%) and zero rate (0%), depending on the type of goods or services. It is expected that the VAT law and its Executive Regulations will be released in the course of 2022.

While Serbia has made its intention to expand the use of e-invoicing in the country clear, the Minister of Finance has acknowledged that there will be a need to adapt to the new system. Therefore, there will be a transition period until the end of April 2022.  This means that the obligation of the public sector to receive and keep electronic invoices and to issue invoices to another public entity will apply from 1 May 2022, rather than 1 January 2022.

We earlier communicated around several other timeframes relating to Serbian e-invoicing and we still expect this to stand:

• the obligation of the private sector entity to receive and keep the electronic invoice issued by the public sector entity, as well as the electronic invoices issued by the private sector entity, will apply from July 1, 2022;
• the obligations of issuing and keeping electronic invoices in transactions between private sector entities take effect from January 1, 2023