Tax Types

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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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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What Exchange Rate To Use For Foreign Currency Invoices From Domestic Suppliers

Do I have to use the exchange rate on the supplier invoice when entering a domestic invoice with a foreign currency.

Most ERP systems, good ones at least such as Oracle and SAP, will allow you to enter and store an exchange rate to use for your foreign currency invoices so that the foreign currency will then be automatically converted to your ledger currency when posted. There are also times when you may receive a foreign currency invoice, USD is the most common scenario, from a domestic supplier and VAT is charged because the sale is within the same country.

The problem

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Senior Account Officers say VAT is causing them most concern

Why be worried about VAT compliance when the answer is out there?

A poll conducted by one of the big 4 consultancies and outlined in their ‘SAO Toolkit‘ said that from a recent poll (no date was given so assume still recent), “over three- quarters (77%) of Senior Accounting Officers say they undertook a review of their reporting systems and nearly half (46%) of firms say VAT is the area of tax which is causing them most concern, followed by PAYE (32%), corporation tax (11%) and excise”.

With this in mind, why then do so many companies have such poorly designed VAT systems and do not invest any money in reducing the risk of non compliance around VAT?

Get in touch with us to find out how we can lead the way to achieving 100% compliance.

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?

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.

 

Hungary to cut VAT on Restaurants and Basics

The Hungarian government has announced its plans to cut VAT on restaurants, café services, milk, eggs and poultry by 2017.

According to this recent proposal as from the 1st of January 2017, the VAT on food basics – milk, eggs and poultry will be cut from the current rate of 27% down to 5%. In addition to this the VAT on restaurant and café services will drop from 27% to 18% with plans to cut this further to 5% in 2018. This is a follow on from early cuts which brought the VAT on pork down from 27% to 5%.

Whilst this will bring a shortfall in revenue for the government they believe that it will have no operational deficit as this loss will be covered by higher expenditure and faster growth, with GDP expected to pick up to 3.1% next year from 2.5% expected this year.

There is also the potential that internet will also be cut from 27% to 18%.

Norway Proposes VAT Increase For 2016

Recently, the Norwegian government has indicated that the lowest rate of VAT is to be increased from 8 to 10% from the 1st of January 2016, the budget has been proposed and confirmed.

Contact eBiz Answers to help you with these changes or if you are one of our clients who have our maintenance contract then expect a call form us shortly to make these changes free of charge for you.

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UAE in talks to introduce VAT

UAE in talks to introduce VAT

Recently the federal Government of the UAE has announced the planned introduction of a federal value-added tax (VAT). The Ministry of Finance (MoF) confirmed that it has been conducting studies into the implementation of a VAT draft along with the other Gulf Cooperation Council (GCC) countries.

The draft law is still pending and under negotiation due to the absence of a final agreement between GCC countries on the tax rate and a list of tax exemptions, but a draft bill could be on the cards very soon. Once a draft has been created an announcement will be made immediately and the country will be given 18months grace period after the implementation to implement the VAT, if it were to go ahead. The VAT is expected to be implemented at a low rate of around 5%.

Israel to cut VAT

Possible VAT cut in Israel

The Prime Minister of Israel, Benjamin Netanyahu has recently announced plans to reduce the current rate of VAT from 18% to 17% to help promote economic growth, following a higher than expected tax collection in recent months. Speaking earlier this month, Prime Minister Netanyahu is quoted as saying  “An economy burdened by high taxes doesn’t grow, so in order to encourage growth I have decided, with Finance Minister Kahlon, to cut taxes.” Continue Reading

Nigeria confirm VAT rise

Nigeria to raise VAT to 10%

Nigeria have confirmed plans to increase the VAT rate to 10%, making it double the current 5% VAT rate, with changes expected to come into affect later in the year.

This increase is due to the recent slide in oil prices that has seen the price drop 100% in the last 14 months alone, this drop has had a big impact on the Nigerian economy as 80% of the governments income comes from petroleum exports, the current war with Boko Haram is also proving costly to the country. This was recently confirmed after talks with stakeholders took place earlier this year, see our previous post  Nigeria propose VAT increase.

Newfoundland – Canada to raise its HST rate in 2016

Canada’s rising Harmonised Sales Tax

The Canadian province of Newfoundland and Labrador is planning to raise its Harmonised Sales Tax (HST) rate from 13% to 15% on the 1st of January 2016. HST is a combined tax made up of federal Goods & Services Tax (GST) and local Provincial Sales Tax (PST), the GST rate will remain at 5% but the PST will increase from 8% to 10%.

The recoverable amount will also be changing in 2016 and 2017; Municipalities and local service districts will receive a partial rebate on the provincial portion of the HST of:

• 25% effective January 1, 2016
• 57.14% effective January 1, 2017

So this will only be effective on the 10% PST.