Country Tax News

Sri Lanka finally implement VAT Changes

As of the 1st of November 2016 the VAT rate in Sri Lanka has risen from 11% to 15%. There has been a lot of confusion over the last few years as to what changes the Government were going to make, as they have announced several proposals previously that have fallen though at the eleventh hour see our previous post here – Will Sri Lanka implement an increased VAT rate?. This is one reason why it is essential to have an adaptable and manageable indirect tax solution.

With this standard VAT increase there have also been several other VAT changes implemented. A range of 81 basic foodstuffs and other products are now Zero-rated. These changes fall inline with the monetary programme set out by the IMF.

Egypt Ratifies VAT Law

Egypt Ratifies VAT Law

Egypt’s President Abdel Fattah el-Sisi has approved the VAT law completing the ratification procedures needed to bring in the introduction of VAT.

Egypt have been talking about making this change for a while now so for many it is a surprise that is has finally been ratified. This change to a VAT system from their current Sales Tax system will be a big change for Egypt, the bylaws for the new legislation will be issued within 30 days. The rate will come in at 13% for 2016/17 fiscal year then rise 1% to 14% the following year.

One of the governments aims with this VAT law is to increase VAT compliance and decrease Tax evasion. The VAT scheme will be implemented as a traditional VAT scheme where VAT is gathered at every stage of the production chain rather than just as a one-off at the end of the chain as is implemented now. There will still be a list of exempted goods/services.

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Gulf States (GCC), India, Anguilla – fix price your Oracle VAT/GST solution now

The world is changing and more tax needs to be generated. For this reason, there are several new countries that are introducing VAT or GST in the next couple of years.

The countries listed below are all adopting VAT or GST;

  • Saudi Arabia
  • Kuwait
  • Bahrain
  • Oman
  • Qatar
  • UAE
  • India
  • Anguilla

As the leading experts for Oracle Indirect Tax configuration, we are in the best position to offer you a fully automated solution for all of these countries and whats more, we are fix pricing the cost of this solution now before we know how complex the requirements will be, thats how confident we are at being able to deliver.

 

So Oracle R12 or Oracle Cloud (Fusion), get in touch to find out more.

IMF welcomes UAE’s VAT plan

 

The United Arab Emirates (UAE) has announced plans to introduce a VAT regime and increase excise taxes, a move that has been welcomed by the International Monetary Fund (IMF).

The UAE Finance Minister has announced that Value Added Tax (VAT) will be introduced at an expected rate of 5% with around 100% items expected to be exempt. The UAE and the other Gulf Cooperation Council (GCC) members have been negotiating a proposed pan-GCC VAT for more than a decade and finally settled on a draft plan last year.

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Adding Real Time Analytics to your Tax Department’s Indirect Tax Toolkit

eBiz Answers have recently added Real Time Tax Analytics to their indirect tax toolkit,  the application has designed specifically with the tax department in mind.   Real Time analytics is a user friendly web application which will inform the tax department of a transaction with a potential tax issue within seconds of it being entered.   This allows the tax department to identify and correct issues at source and empowering the tax department to be involved in the end to end process.

The ever increasing use of technology by Tax Authorities for tax compliance is directly impacting the inner workings of the tax department.     The VAT landscape is changing rapidly across the globe as Tax Authorities introduce technology to crackdown on tax avoidance and ensure corporate tax transparency.    From South American to Europe,  tax authorities are passing regulation to ensure companies provide accounting data in a standardised format, direct from their ERP applications on a monthly basis.  The tax authorities can then check the file, validate the data and ensure compliance.   Poland has introduced electronic filing with SAF-T files from the 1st July to join Portugal, Luxembourg, Austria and Lithuania who are already using the SAF-T filing format.

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How to Transfer Invoice Tax Variances in Average Costing Organization

Oracle Payables will calculate Invoice Tax Variances when there is a non-recoverable tax that has been calculated at AP invoice entry that was not included on the Purchase Order.    In an average costing organization this tax variance should be transferred to the inventory valuation to ensure that the correct item cost is calculated.     Please see attached video for a demonstration of this functionality in Oracle R12.

Oracle – VAT applicability between a parent company and a permanent establishment in Italy

Really this can apply to any EU country and comes under the tax engine rules for Same VAT Group and can apply to any VAT or GST based tax regime.

In reference to the original article by the TMF group on VAT in Italy between a parent company and its child, I thought that i would try and explain this in terms of setting up the tax in Oracle R12 eBTax or Oracle Cloud Tax.

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Oman to introduce VAT in 2018

The Omani government has announced its plans to introduce a VAT regime, previously said to be as early as 2017, it’s now believed this will come into affect on the 1st of January 2018, giving businesses more time to acclimatise.

The VAT rate is expected to come in at 5%, which although low by European standards, is expected to generate OMR250 million a year. These extra funds are needed to cover the gap caused by the recent and continued drop in oil prices which are affecting many of the Gulf states. The Omani government have also stated that they will introduce a zero rate for many essential and basic goods and services.

For more information click here (note it goes to our new Innovate Tax site)

Puerto Rico VAT Plans blocked

Puerto Rico’s plans to introduce VAT on the 1st June 2016 appear to have been scrapped.

Earlier this month legislators voted against the introduction of VAT to replace the current Sales and Use Tax, with an almost unanimous vote of 21 to 1.

However, there is still much confusion as to what will happen with Puerto Rico’s indirect tax regime as they are still in dire need of a way in which to raise funds to cover their rising debt, so a VAT regime could still be on the cards?

European Council VAT Action Plan on VAT Fraud

On 25th May 2016 the ‘Council for the European Union’ and the ‘Economic and Financial Affairs Council’ (also known as ECOFIN) agreed on an action plan to tackle VAT fraud and the ever increasing VAT gap in Europe, leading towards a single EU VAT area.

At a recent meeting in Brussels the ECOFIN reviewed the programe see the original publication here, to tackle fraud and simplify the process around VAT compliance. The plan proposes a range of measures including the extension of MOSS (Mini One Stop Shop) reporting to goods, the removal of zero rating intra-Community supplies and better co-operation between tax authorities.

The key points raised were;

• Welcomes the findings towards a single EU VAT area with the aim of tackling VAT fraud and closing the VAT gap.

• It agrees with the Action Plans call for new and radical anti-VAT fraud measures, but highlighted that more simplification is required with the aim of introducing these legislative principles in 2017. Continue Reading

Canada: Prince Edward Island PST increase

On April 19th 2016, the finance minister for the Canadian province of Prince Edward Island, announced the fiscal 2016-17 budget. Whilst it contained no new taxes or further increases to income tax, it did contain an increase to the Provincial tax part of the Harmonised Sales Tax (HST), taking this from 14% to 15%. This is made up of 10% PST and 5% GST and will be effective as of the 1st of October 2016.

This is the third province this year to announce a rise in PST, see links below to earlier announcements.

New Brunswick increase HST (published April 2016).
New Foundland and Labrador to raise HST rate (published August 2015).

Confirmed – Greek standard rate VAT to increase to 24%

On the 22nd May 2016, the Greek Parliament confirmed that the standard rate of VAT will rise from 23% to 24% on the 1st June 2016.

This is part of a group of measures, agreed to after 6 months of negotiations with is creditors, Greece hopes will help unlock bailout funds needed to repay loans and cover the gap in the 2017-18 budget forecast. It is estimated that the rise will generate between €400m and €500m additional revenue.

However there is still much scepticism as to whether the Tax hike will be counterproductive or not, as Greece are still in a recession many believe that raising VAT is one of the worst things they could do right now, especially after the previous VAT hikes and scrapping of the lower rates for some Greek Islands.

This could also lead to Tourists and companies going else where.

 

Spain – To Allow VAT Refunds To A Foreign Bank

SPAIN ALLOWS VAT REFUNDS INTO FOREIGN BANK ACCOUNTS

The Spanish government has now made it possible to receive Spanish VAT refunds into a foreign bank account. This will be particularly useful for those companies that have a Spanish VAT registration number (ES VAT) but no physical location in Spain.

Previously, VAT registered companies had to have a bank account set up under a bank registered in Spanish  to receive a refund.

It does appear that only the SEPA format can be used so any country that is using SEPA will be able to take advantage of this new change. SEPA (Single European Payments Area) covers all EU countries, Norway, Iceland, Liechtenstein and Switzerland (there are a few exclusions like overseas territories).

The original article was from Marosa and you can read more about VAT refunds in our article EU VAT Refunds. Recover VAT through your VAT return or separate refund claims?.

China Completes VAT Implementation

Since May 1st 2016, China has now fully rolled out a value-added tax (VAT) system across all industries that previously had a business tax. This completes the most ambitious overhaul of its tax regime in three decades.

China has been moving progressively over the past years from a Business Tax (BT) system to a Value Added Tax (VAT) system in an attempt to streamline China’s indirect tax system. The VAT reform project was launched first as a pilot program in January 2012 in Shanghai with an objective to remove dual indirect tax system and to give Chinese business a better global competitive tax structure in order to boost the economy’s growth.

The final four service sectors, financial services, consumer services, real estate and construction completed the transition to VAT in all service sectors. The replacement of VAT with Business Tax will mean the end of double taxation that businesses in China have faced.

Japan to increase Consumption Tax and introduce other reduced rates

The Japanese government has recently announced an increase of Consumption Tax from 8% to 10%, along with the introduction of a reduced rate of 8% that will be levied on basic foodstuffs and beverages.

This is currently due to take effect on the 1st of April 2017, however this rise has already been delayed once in 2015 and because of the current lack luster economy there is potential for it to be delayed yet again.

The decision to bring in a reduced rate on basic foodstuffs and beverages is being considered to ease the burden on consumers after recent similar rate increases pushed the economy back into a recession. This was the case in 2014 when Consumption Tax was increased from 5% to 8%, raising indirect tax from Yen 8 trillion to Yen trillion in just two years.

Nevertheless, this time it appears that they will still go ahead as Mr Aso, the Finance Minister, told parliament “Without attaching conditions about the state of the economy, we will certainly raise consumption tax to 10 per cent in April 2017”. So companies should start preparing for this as soon as they can to be ready for the tax rate increase and the introduction of a reduced rate early next year.