major legislative changes around the globe · major legislative changes around the globe ......
Post on 15-Jun-2018
221 Views
Preview:
TRANSCRIPT
2017 IPT’s Value Added Tax Symposium
Major Legislative Changes Around the Globe
Réka Ökrös European VAT Director
Dover Corp.
Geneve, Switzerland rokros@dovercorp.com
Philippe Stephanny Senior Manager
KPMG LLP
Washington, DC philippestephanny@kpmg.com
2017 IPT’s Value Added Tax Symposium 2
Agenda — Overview of recent VAT/GST developments
— India GST reform
— VAT implementation in the Middle East
— Potential VAT consequences of Brexit
— Trends in VAT/GST compliance
2017 IPT’s Value Added Tax Symposium 3
Overview of
Recent VAT/GST
Developments
2017 IPT’s Value Added Tax Symposium 4
Recent VAT/GST developments
India:
- GST reform effective Jul. 2017
European Union:
- Single Digital Market proposal
in Dec. 2016
- Single VAT area proposed in
Sep 2017
GCC:
- Plans to introduce VAT by
2018
Russia:
- B2C ESS rules effective Jan.
2017
Australia:
- B2C ESS effective Jul. 2017
and low value import rules
effective Jul. 2018
United Kingdom:
- Referendum on leaving the
European Union (Jun. 23, 2016)
Taiwan:
- B2C ESS rules effective May
2017
Colombia:
- B2C ESS rules effective Jul.
2018
Serbia:
- B2C ESS rules effective Jan.
2017
Belarus:
- B2C ESS rules effective Jan.
2018
Thailand:
- B2C ESS rules effective May
2017
Spain:
- Introduction of “real time
reporting” effective Jul. 2017
Costa Rica:
- Proposed introduction of 15%
VAT
2017 IPT’s Value Added Tax Symposium 5
India GST Reform
2017 IPT’s Value Added Tax Symposium 6
India’s past indirect tax landscape Indirect Tax Taxing Authority Applicable on
Excise duty Federal government Manufacture of goods in India
Service tax Federal government Provision of taxable services
Central sales tax (CST) Federal government Inter-state sale of goods
VAT State governments Sale of goods within the state
Entry tax/octroi State governments/local
authorities
Entry of goods in state / local area for
consumption, use or sale
Credit set off possible No set off possible
Input VAT
Input CENVAT
(Service Tax & Excise Duty)
Input CST – Always a Cost
VAT Liability
CENVAT Liability
(Service Tax & Excise Duty)
CST liability
Input Credits
2017 IPT’s Value Added Tax Symposium 7
Overview of new indirect tax system
•Tax on all supplies
New GST
•Excise duty, CVD, SAD, Service tax, VAT, CST, Entry tax, Purchase tax, Entertainment Tax, Luxury Tax, Cesses
Subsumed
•Dual GST for Centre (CGST) and states (SGST), IGST on inter-state supplies
New mechanism
•Full credit of all GST paid, except cross credits between CGST and SGST
Credits
•State GST laws follow same model law approved in advance by GST Council
•Rules harmonized between Centre and states
•Streamlined administration
Streamlined approach
•Lower rates: 0%, 0.25%, 3%, 5%, and 12%
•Standard rate: 18%
•Higher rate: 28%
•Sin /demerit rate: 28% + Cess
Multiple rates
2017 IPT’s Value Added Tax Symposium 8
India’s dual GST system
Intra-state sale of goods Rate 100
Excise Duty 12.5
%
12.50
Value Added Tax (VAT) 5% 5.63
Total Invoice Value.. 118.1
3
Intra-state supply of
goods
Rate 100
CGST 9% 9
SGST 9% 9
Total Invoice Value.. 118
Inter-state sale of
goods
Rate 100
Excise Duty 12.5% 12.50
Central Sales Tax (CST) 2% 2.25
Total Invoice Value.. 114.75
Inter-state supply of
goods
Rate 100
IGST 18% 18
............ …. ….
Total Invoice Value.. 118
* Calculations are made assuming GST of 18% and state and Centre
share equally
Past Structure GST Structure
2017 IPT’s Value Added Tax Symposium 9
Place of supply – relevance
Supply of goods/service in the
course of inter-state trade or
commerce – subject to IGST
Determine the type of taxes applicable on a transaction
Supply where the location of the vendor
and the place of supply are in different
states
Supply where the location of the vendor
and the place of supply are in the
same state
Supply of goods/services in
the course of intra-state trade
or commerce – subject to
CGST and SGST
Any supply of goods or services imported in
India treated as an inter-State sale subject to
IGST
2017 IPT’s Value Added Tax Symposium 10
General place of supply rules Supplies of goods
— Where supply involves movement of goods
- Location where the goods arrive
— Where supply does not involve movement of goods
- Location where delivery takes place
— Where goods are assembled or installed at site
- Place of installation
— Where goods are supplied on board of means of transport
- Location at which goods are taken on board
Supplies of services
— General rules
— Made to a registered person (B2B): location of such person
— Made to a non-registered person (B2C)
- Location of the recipient where the address on record exists
- Location of the supplier in all other cases
— Law provides numerous exceptions, including
— Immovable property related services: where immovable property is located
— Restaurant, personal, and health services: place of performance
— Online information and database access or retrieval (OIDAR) services provided by a nonresident: location of recipient of services (2 of 7 conditions must be satisfied to consider a customer located in India)
2017 IPT’s Value Added Tax Symposium 11
Place of supply of goods – example
UP Supplier UP
Warehouse
State of Uttar Pradesh
State of Maharashtra
MH
Customer
Place of supply in UP because goods arrive in
UP
Intra-state trade (CGST + SGST) because
vendor and place of supply are in same state
Shipment
Sale
2017 IPT’s Value Added Tax Symposium 12
Place of supply of services – example
UP Supplier UP
Warehouse
State of Uttar Pradesh
State of Maharashtra
MH
Registered
customer
Place of supply in MH because service is
provided to a registered person in MH
Inter-state trade (IGST) because vendor state
and place of supply are different
Packaging services of goods in transit
Sale
2017 IPT’s Value Added Tax Symposium 13
GST credit mechanism Conditions for allowing credit
—Possession of a tax invoice, or other tax-paying document issued by a vendor
—Goods / services, on which tax credit is claimed, have been received
—Tax charged in respect of said supplies has been actually paid by the vendor to the Government
— Inward supply return has been submitted by the customer
—Payment for the invoice has been made to vendor within 180 days of date of invoice
—Credit not allowed in respect of restricted goods and services
—Credit to be allowed only upon online matching of transactions of purchase and sale
Proportionate credit allowed where a person is also engaged in non-taxable supplies
2017 IPT’s Value Added Tax Symposium 14
Order of utilization of GST credits
Output Liability (GST on sales)
IGST
CGST
SGST
Credit available for utilization
(1) IGST, (2) CGST, (3) SGST
(1)CGST, (2) IGST
(1) SGST, (2) IGST
2017 IPT’s Value Added Tax Symposium 15
GST credits – example
Order of utilization
State A State B
Inter-state purchase - 50
IGST @ 18% = 9
Local purchase - 50
CGST @ 9% = 4.5
SGST@ 9% = 4.5
Input
credits IGST 22.5
Customer
Ord
er
of
uti
liza
tio
n
Inter-state sale - 125 Company
Local sale - 150
CGST = 13.50
SGST = 13.50
Distributor
Output IGST 22.5
Less:
Input IGST 9
Input CGST 4.5
Input SGST 4.5
Net IGST
payable by
Company
4.5
CGST SGST
Output GST 13.5 13.5
Less: Input IGST 13.5
Input IGST 9
Net CGST payable by
Distributor
0
Net SGST payable by
Distributor
4.5
2017 IPT’s Value Added Tax Symposium 16
GST returns
File GSTR-9
—Purpose: Annual Return to be
uploaded along with Financial
Statement
—Process: Data to be fed
manually
—Due Date: By 31st Dec of next FY
File GSTR-1
—Purpose: Related to
Outward Supplies (sales)
—Process: Outward
Supplies data to be fed
manually
—Due Date: By 10th of next
month
File GSTR-2
—Purpose: Related to Inward
Supplies (purchases)
—Process: ITC data auto
populated from GSTR-1 of
the Suppliers
—Due Date: By 15th of next
month
File GSTR-3
— Purpose: Final Return
— Process: Data to be auto
populated from GSTR-1 and
GSTR-2 and net tax payment
(if any) to be made
— Due Date: By 20th of next
month
File GSTR-6
—Purpose: Related to Input
Service Distribution
—Process: ITC data auto
populated from GSTR-1 of
the vendors
—Due Date: By 13th of next
month
File GSTR-7
—Purpose: Related to tax
deduction at source
transactions
—Process: Data to be fed
manually
—Due Date: By 10th of next
month
2017 IPT’s Value Added Tax Symposium
Post-implementation business update
– India GST Rather peculiar situation even post-GST, relying on «newspaper» communication in the absence of
official «notifications» on July 1, 2017
Many mid-size and small businesses were completely unprepared, compliance obligations are expected
to be more relaxed for them including quarterly filings etc.
Strong post-implemmentation lobbying activity to create special rules for certain sectors or regain tax
incentives,
- Transport companies are on strike to move diesel under the GST regime from excise
- Excise duty exemptions from previous regime will continue; despite that it is non-compliant with
GST-system
- Special Economic Zones are now eligible for refund but local tax officers have been creating «new
local rules» to deny refunds
- Changes of GST rates for various products and services
GST has replaced the previous tax regime but the underlying non-tax legislation and interpretation
has continued
Issues with GST refunds for export businesses
17
2017 IPT’s Value Added Tax Symposium
Post-implementation business update
– India GST Relief to exporters
Refund of IGST paid on goods exported outside India would begin to be paid as follows:
- From 10 October, 2017 for exports in July 2017,
- From 18 October, 2017 for exports in August, 2017,
- Refunds for other months would be handled expeditiously.
Refund of IGST paid on supplies made to SEZ and of input taxes on exports made under bond/ LUT
would be processed from 18 October, 2017.
Central and State GST authorities would be suitably empowered so that exporters get refunds from only
one authority.
Notification no. 37/2017, superseding notification no. 16/2017, extending the facility to export goods
under a letter of undertaking to all exporters. This amendment addresses a major issue in respect of a
blockage of funds for a number of exporters who were required to submit bonds, and bank guarantees
for exports of goods without payment of IGST.
18
2017 IPT’s Value Added Tax Symposium 19
VAT
Implementation in
the Middle East
2017 IPT’s Value Added Tax Symposium 20
Overview Gulf Cooperation Council
— Regional political organization consisting of 6 states in the Gulf
- Kingdom of Bahrain
- State of Kuwait
- Sultanate of Oman
- State of Qatar
- Kingdom of Saudi Arabia
- United Arab Emirates (UAE)
Unified Agreement for Valued Added Tax of the Cooperation Council of Arab States of the Gulf
— Published May 2017
— Establishes harmonized 5% VAT throughout the GCC with local country-specific rules
— Implementation expected in 2018
- KSA and UAE announced a Jan 1, 2018 date
2017 IPT’s Value Added Tax Symposium 21
Place of supply rules Place of supply of goods
— In general: where the goods are physically located at the time when the delivery to the customer begins
— Intra-GCC supplies – business-to-business (B2B): where the goods arrive
—Exceptions: intra-GCC supplies of goods – business-to-customer (B2C) above $100,000 in 12 months; supplies of oil, gas, water, and electricity
Place of supply of services
—B2B: where the customer is resident
—B2C: where the supplier is established
—Exceptions: hiring of vehicles; transportation services; real property related services; telecommunications and electronic services; and restaurant, cultural, and educational services
2017 IPT’s Value Added Tax Symposium 22
Zero-rated supplies The following sales are subject to VAT at 0% (i.e., no VAT is charged and VAT incurred in relation to these supplies remains deductible)
— International and intra-GCC transportation of goods and passengers
— Exports of goods, including related supplies
— Services provided to GCC nonresident that are used outside the GCC, unless a special sourcing rule applies
— Supply of investment gold, silver, and platinum
Member states may zero-rate the following supplies
— Oil sector and oil & gas derivatives sector
— Medicines and medical supplies based on a common list that is to be determined by the Committee of Health Ministers
— Basic food items based on a common list to be ratified across the GCC
— Supplies of certain vehicles, and related goods services, used for the transportation of goods and passengers
2017 IPT’s Value Added Tax Symposium 23
Exempt supplies The following supplies are VAT exempt (i.e., no VAT is charged
but VAT incurred in relation to these supplies is not deductible)
—Financial services carried out by authorized banks and financial
institutions
Member states may opt to exempt supplies (or refund VAT
paid) to the following persons
—Public bodies
—Charitable organizations
—Companies hosting international organizations
—Persons purchasing a residential property for personal use
—Farmers and fisherman not registered for tax
2017 IPT’s Value Added Tax Symposium 24
Exempt or zero-rated supplies Member states may opt to exempt or zero-rate the following
sectors
—Education
—Medical
—Real estate
—Local transport
2017 IPT’s Value Added Tax Symposium 25
VAT deduction Conditions
—VAT must be incurred on goods and services used in the
economic activity
—The taxpayer must hold a valid tax invoice or customs document
—Member states may adopt their own conditions (e.g., deny
deduction for certain expenses)
In case a taxpayer performs both taxable (i.e., 5% and 0%) and
exempt supplies, VAT incurred is only partially deductible
based on an apportionment method determined by member
states
2017 IPT’s Value Added Tax Symposium 26
Compliance Registration
— Required: annual taxable supplies above $100,000 (equivalent in local currency)
— Voluntary: annual taxable supplies between $50,000 and $100,000 (equivalent in local
currency)
— Possibility to create a VAT group between resident taxpayer
— No registration threshold applies to nonresidents
Returns
— Minimum period is 1 month, but each member state has discretion to extend it
Invoices
— Taxpayers are required to issue tax invoices for supplies of goods and services
(including deemed supplies)
— Member states determine content of tax invoices and may exempt from requirement to
issue tax invoices for VAT exempt supplies
Recordkeeping
— Tax invoices and accounting records must be kept for no less than 5 years
— For real estate properties, tax invoices and accounting records must be kept for 15
years
2017 IPT’s Value Added Tax Symposium 27
KSA v. UAE – Registration
Automatic registration already started for
large businesses (deadline is Dec. 20)
Small businesses with turnover of less
than SAR 1 million ($266,000) can delay
registration until January 1, 2019
Nonresidents must appoint a local tax
representative
Kingdom of Saudi Arabia
VAT registration started in September
2017
United Arab Emirates
Kingdom of Saudi Arabia & United Arab Emirates
Mandatory registration threshold will be approx. $100,000
Voluntary registration threshold will be approx. $50,000
VAT grouping (based on country specific conditions)
Businesses making zero-rated supplies are not required to register
2017 IPT’s Value Added Tax Symposium 28
KSA v. UAE – Zero-rated supplies
Export services conditions:
1. Services not sourced in GCC
2. Evidence that customer is resident
outside GCC
3. Benefit of services is not received in GCC
4. Services not related to tangible goods in
GCC
5. Vendor intends that services will be
consumed outside GCC
Kingdom of Saudi Arabia
Newly constructed residential properties
(i.e., first time supply within 3 years of their
construction)
Certain education services, and relevant
goods and services
Healthcare services, and relevant goods
and services
Supplies of certain sea, air, and land
vehicles
United Arab Emirates
Kingdom of Saudi Arabia & United Arab Emirates
Exports of goods and services
International transportation, and related supplies
Supplies of medicine and medical equipment
Certain investment grade precious metals
2017 IPT’s Value Added Tax Symposium 29
KSA v. UAE – Exempt supplies
N/A
Kingdom of Saudi Arabia
Local passenger transport
United Arab Emirates
Kingdom of Saudi Arabia & United Arab Emirates
Financial services (including life insurance and Islamic finance), excluding fee based
revenue
Residential real properties
2017 IPT’s Value Added Tax Symposium 30
KSA v. UAE – Miscellaneous VAT liability on imports
— In both countries VAT is due before goods are released
- Self-assessment under reverse charge mechanism for imports done by taxpayer in UAE
- Reverse charge applicable in KSA upon approval by tax authority
Compliance
— Standard VAT return filing period: quarterly
- In KSA, monthly for taxpayers with annual supplies above KSA 40,000,000 ($10,665,000)
- Other filing periods may be considered by UAE
Recordkeeping
— KSA requires tax invoices and records to be kept in Arabic in Kingdom for 6 years (15 years for immovable capital assets and 11 years for movable goods falling under the capital goods scheme)
- Electronic recordkeeping possible, but there must always be an access terminal in Kingdom
- Tax invoices must be issues for B2B and B2C supplies (simplified invoices may be issued for supplies below KSA 1,000)
- Invoices must be printed in Arabic and maintained in hard copy for 2 months
2017 IPT’s Value Added Tax Symposium
Preparing for VAT in the GCC as a
business EU type VAT model as GCC is a common economic zone. However, the EU VAT and
GCC`s VAT system are not identical
No precedent as no VAT system in place before in GCC
GCC level court of justice interpreting the GCC VAT Act and harmonizing the practice
is not forseen, while in the EU, the European Court of Jusctice is managing this
function
The local tax adminisitration may provide its views on various matters in the law but a
ruling system is not confirmed at this stage
Tax administration staff has very little previous tax experience, recruitment is on-going
Go-live
Initially, GCC countries had committed to giving businesses 18 months to achieve
compliance by 2018.
However, this time frame has now been compressed to four months or less, due to
delays in the ratification of the GCC VAT Framework Agreement.
Implementation regulations are not out yet.
Penalty regime is expected to be severe
31
2017 IPT’s Value Added Tax Symposium
Preparing for VAT in the GCC as a
business Pricing and VAT clauses
Where a contract is concluded prior to the introduction of VAT in respect of a supply
which is wholly or partly made after the introduction of VAT, and the contract does not
contain clauses relating to the VAT treatment of the supply, then consideration for the
supply will be treated as inclusive of VAT.
Uncertainity around the Free Zones VAT position
Free zones are special areas within the customs territory of each state — generally
seen as foreign territories for customs duty purposes.
Free zones established by national law and operating within a gated zone are likely to
be treated as outside the scope of GCC VAT.
Service free zones and special economic zones (SEZs) that are likely to be within the
GCC will be subject to VAT.
32
2017 IPT’s Value Added Tax Symposium 33
Potential VAT
Consequences of
Brexit
2017 IPT’s Value Added Tax Symposium 34
Brexit – Tax Consequences of EU Membership Once the UK notifies the EU of its decision to leave, a 2 year exit negotiation period will begin. The
outcome of this negotiation will potentially have a significant impact on the UK tax system, as European law
impacts UK tax law in two main ways. In a worse case scenario, the UK would cease to be a member of the
EU, if no agreement is reached during the 2 year period,
On June 23, 2016 the UK voted to leave the EU
• Means that UK domestic legislation cannot
conflict with principles of EU law, particularly
the “four fundamental freedoms”
• Direct taxes are said to be the competence
of each EU member state
• However, UK domestic tax legislation must
be in accordance with EU Treaty principles
• As such, UK direct taxation is subject to a
number of EU directives, EU principles and
the jurisdiction of the Court of Justice of the
European Union (‘CJEU’)
1 Supremacy of EU law (direct taxation)
• EU legislation & CJEU determinations are
the main sources of UK indirect tax
legislation
• Customs & excise duties as well as VAT
are all governed directly by EU legislation
• Membership of the EU gives UK
companies access to the internal market
(made up of 28 member states) and to a
wide network of preferential trade
agreements with third countries
2 Indirect taxes
Four Fundamental freedoms: Free movement of
Capital Services People
Goods
T
A
X
T
A
X
2017 IPT’s Value Added Tax Symposium 35
Timeline
2016
2017 2018 2019
UK completely removed
from EU membership?
Negotiations will start after the notification
Each EU regulated sector would face different
regulatory conditions
Companies benefiting from EU agreements would
see an impact on the conditions applying to their
access to the single market
Defining the terms of
the UK exit
Implementation of
changes once the
terms of agreement
are clarified
Brexit referendum
June 23 2016
2017 2018
GBP value, stock markets, GB S&P rating retrograded (AA), economic uncertainties, doubts
about the outcome of the negotiations, etc. Immediate impacts
2016 2017 2018 2019
Brexit notification
March 29, 2017
2017 IPT’s Value Added Tax Symposium 36
Brexit – VAT Consequences Issue Explanation Implications Post Brexit uncertainties
VAT is a tax
regulated by
consistent EU-
wide rules
• Intra-community
supplies of goods and
services will now be
treated as imports and
exports between UK
and EU
• UK rules and
interpretation may
diverge with EU over
time
• VAT leakage in certain supply
chains (import VAT v. intra-
Community acquisition)
• No EU reliefs available e.g.
triangulation relief
• Invoicing and systems
requirements would need to
change
• No more Intrastat and EC
Sales Lists
• No more data exchange via
VIES
• Unknown if UK will retain
VAT system in same form
and how it will interact with
EU counterparts
VAT is
governed by EU
legislation and
interpretation
• UK no longer subject
to challenges by
European Commission
or to the jurisdiction of
the CJEU
• UK corporates no longer
afforded protection under EU
VAT principles or a right to
appeal to ECJ
• Cannot rely on ECJ and EU
jurisprudence for VAT matters
• UK courts decide interpretation
of VAT legislation
• Greater autonomy over VAT
rates and reliefs
• Possible that UK would
simply continue to mirror
EU interpretations and take
into account EU judgments
• Value of established ECJ
case law
2017 IPT’s Value Added Tax Symposium 37
Brexit – VAT Consequences (Cont’d) Issue Explanation Implications Post Brexit uncertainties
Specific EU VAT
simplification
measures no
longer apply
• Should no longer apply:
• MOSS for electronic,
telecommunication
and broadcasting
services
• Simplified B2C
distance selling rules,
• Simplified cross-
border VAT refund
procedures
• Simplified
triangulation rules
• TOMS
• Any future EU wide
simplifications under
VAT Action Plan
• UK MOSS registered
businesses would fall
under Non-Union Scheme
+ non UK entities would
need to change
registration country
• Use of small value import
threshold simplification or
new system replacing it
• UK businesses will be
required to follow 13th
Directive refund
procedure
• UK intermediaries likely to
register in EU
• UK tour operators likely
be required to register in
EU
• Transition rules for MOSS
registered businesses
• Limitations to UK
businesses’ VAT refund
applications under 13th
Directive
2017 IPT’s Value Added Tax Symposium
Preparing for Brexit as a business On time delivery - Customs clearance
Non-EU customs clearance number today: 76 million p.a., estimated future transactions with EU countries: 100-300 million p.a.
- Will HMRC`s customs system be capable of handling the number of transactions?
Customs clearance system will be upgraded but upgrade was designed to faciliate current transactions flows and not a post-Brexit status
A bottleneck is expected at the borders of the UK on March 29, 2019
Authorized Economic Operator(AEO) status
- UK companies will loose this status in the EU with Brexit.
- AEO in the UK? Will I be granted one by March 29, 2019?
HS, classification, origin management of goods entering the UK from the EU or leaving for the EU
- Is your Intrastat data reliable?
- Do you have the resources capable of managing mass customs classification pre/post-Brexit?
- Do you have the systems in place to suport HS classification, origin management?
38
2017 IPT’s Value Added Tax Symposium
Preparing for Brexit as a business Pricing
Customs duty is anticipated to be levied at an average customs duty rate of 5% in case of hard Brexit
- Who will be responsible to import in the EU; in the UK?
- Incoterms agreed needs to be reviewed and renegotiated?
Example
UK company is selling on DDP EU terms: COGS is expected to increase, margin descrease.
How to compensate? Price increase?
EU company is sourcing from the EU on DAP EU terms.
How to avoid the increase? Alternative sourcing?
39
2017 IPT’s Value Added Tax Symposium
Preparing for Brexit as a business Supply chain reorganization
- Sales are managed through a UK disribution center for the EU
- UK based limited risk distributor in a central buy sell model (e.g. Swiss Principal) is also responsible for sales into Ireland
- Should a new disribution center in the EU be established?
- Should a new LRD in Ireland be established?
- Where to centralize import into the EU to avoid multiple VAT registrations? Global VAT representative schemes?
- Call of stocks held by EU entities in the UK
- VAT registration of EU established companies with call off stocks in the UK?
- After market (service and spare parts)
- Should a repair and spare parts center be located in the UK?
40
2017 IPT’s Value Added Tax Symposium 41
Trends in
VAT/GST
Compliance
2017 IPT’s Value Added Tax Symposium 42
Sistema Público de Escrituração Digital
(SPED) in Brazil
Immediate Supply of Information” (“SII”) in
Spain (Jul. 1 ,2017)
Online invoice reporting in Hungary (Ju. 1,
2018)
Use of D&A tools by tax
authorities
Requirement to provide
financial data in SAF-T and
similar file formats
Optional (e.g., EU, Canada,
Australia)
Mandatory (e.g., Latam, EU
public procurement)
Tax authority validation of e-
invoices (e.g., Latam)
Trends in VAT compliance
Real time
reporting
E-invoice
E-filing
E-audit
2017 IPT’s Value Added Tax Symposium 43
Other ways considered to improve VAT compliance •Purchaser pays VAT directly to a dedicated VAT bank account and not to the vendor
•e.g., Italy for public procurement and companies listed on Italian stock exchange; Romania for
VAT split payment
•Under reverse charge mechanism purchaser self-assesses VAT
•EU considering extending under certain conditions reverse charge mechanism to all B2B transactions
Generalized reverse charge
mechanism
• In addition to filing VAT returns, many jurisdictions require filing additional reports that allow a cross-check of information
•Examples include sales and purchases lists in several EU and Latam jurisdictions
Additional returns / reports
• “Blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions, but virtually everything of value”*
Use of blockchain technology
* Don & Alex Tapscott, Blockchain Revolution (2016)
2017 IPT’s Value Added Tax Symposium 44
Q&A
top related