Global VAT Guide: March 2021 VAT Updates
March 2021 VAT updates in Bulgaria
Bulgaria has officially introduced amendments to the VAT reporting obligations in relation to transactions with Northern Ireland.
In their monthly VIES returns (EC Sales Lists), Bulgarian suppliers must now report the below transactions to their recipients in Northern Ireland (they must have a VAT number that begins with the prefix XI):
- Triangular simplifications (when a Bulgarian person acts as an intermediary and the person from Northern Ireland is the acquirer);
- Intra-Community supply of goods; and
- Transfer of own goods from Bulgaria to Northern Ireland under a call-off stock arrangement
- Supply of services by Bulgarian suppliers to Northern Ireland recipients should not be reported in the VIES return of the supplier.
March 2021 VAT updates in Poland
SLIM VAT updates in Poland
As previously discussed, earlier this year Poland adopted a number of changes aimed to simplify VAT compliance for Polish taxpayers (SLIM VAT).
It has been announced that another package is being worked on – SLIM VAT 2. This package of simplifications that contains 15 new solutions will facilitate tax settlement and save time spent on formalities. The second SLIM VAT package will remove some outdated and unnecessary obligations for companies.
The package aims to:
- Remove the time-consuming obligations;
- Provide simpler invoicing; and
- Improve liquidity.
Some of the new solutions include:
- Easier choice of taxation options in real estate;
- Transfer of funds between VAT accounts in different banks;
- Facilitate the deduction of VAT on cars used for business activities;
- The possibility to issue an invoice 60 days before delivery of goods/service; and
- Extend the time to take advantage of bad debt relief from 2 to 3 years
With SLIM VAT 2, taxpayers will no longer have to specify the reason for correcting invoices.
The Ministry of Finance has started pre-consultation of the SLIM VAT 2 project. Pre-consultation was open to everyone. Comments could be submitted up until 1 March 2021.
Structured Invoicing updates in Poland
A draft bill has been published by the Polish Ministry of Finance. This bill proposes the establishment of a structured e-invoicing system. This system would allow VAT payers to issue and receive a new type of invoice, a structured invoice. The structured invoice will be a type of e-invoice that would coexist with the paper and electronic invoices that are currently being used. Structured invoices will be created in the taxpayers accounting and financial systems and sent to the National System of e-invoices (KSeF).
With this system, a taxpayer would use a template that is provided by the Ministry of Finance to prepare a structured invoice in the financial system. An invoice number and a date/time stamp will be assigned to structured invoices and the invoices will be deemed as issued and received. Taxpayers would also have the ability to browse invoices that have been issued/received in the system.
Below are some other amendments that are proposed:
- There will be no duplicate structured invoices;
- The deadline for VAT refunds for taxpayers that only issue structured invoices will be reduced to 40 days;
- The structured invoices will be stored for 10 years (from the end of the year the invoice was issued); and
- There will not be a requirement to submit SAF-T file.
This bill is currently under consultation and structured invoicing is planned to be in effect from 1 October 2021. To begin with, the acceptance and application of structured invoices will be voluntary. The Ministry of Finance may make this mandatory in 2023.
March 2021 VAT updates in Spain
New tool to complete VAT returns
From February 2021, the second phase of the project to offer more facilities for tax declaration has been launched and services are now available to all taxpayers in Spain.
The tool that is now available to all taxpayers is called Pre 303 and this will allow for easy VAT return submission.
Form 303 is the self-assessment return that VAT taxpayers are obligated to submit.
In 2020, the first phase of providing a pre-filled VAT return was rolled out – this was offered to a limited number of VAT taxpayers – Pre 303 Total was previously provided to taxpayers under SII with turnover under €6 million.
Pre 303 will now reach SME’s, self-employed people and 3.5 million taxpayers.
This tool will automatically fill out some boxes in the VAT return based on census information and economic data.
These improvements will reach taxpayers in April.
VAT payment change
At present, it is mandatory for foreign businesses to initiate payments for Spanish taxes from a Spanish bank account. It has been announced that from 15 March 2021, foreign businesses will no longer need to make their payments from a Spanish bank account. Foreign businesses should still continue to use Spanish bank accounts when paying taxes up until 15 March 2021. After 15 March 2021, after a VAT return has been completed there will be an option to pay the VAT amount due with a bank transfer – taxpayers will be obligated to cover the bank transfer fees.
The below details will need to be entered into the tax authorities’ portal before making a bank transfer:
- VAT return code/number;
- Payment amount (this must be in euros);
- The first 8 digits of the IBAN number of the account the funds are being sent from (if the account is not an IBAN account, use the first 8 digits of the account with BIC/SWIFT code); and
- The taxpayer’s Spanish VAT identification number (NIF);
The taxpayer will then be prompted to transfer the funds to the correct bank account and will obtain a payment identifier. This payment identifier must be included in the transfer concept field. After the payment has been processed, taxpayers will have the ability to access their proof of payment on the tax authorities’ website using their payment identifier number and the other information needed to set up the transfer.
March 2021 VAT updates in China
In 2020, China’s State Taxation Administration implemented pilot programs on electronic special VAT “e-fapiao” invoices in a few cities. In early 2021, this program has been extended to other regions in China and it is hoped that special e-fapiao will be extended to other regions and there will be a full nationwide roll-out this year. Invoices are called fapiao in China – a legal receipt that is issued on paper and is printed and administered by the State Taxation Administration (STA).
An e-fapiao is the digital version of a fapiao. There are 2 types of e-fapiao:
- Like a paper invoice, the general e-fapiao is issued for commercial transactions when VAT is not deductible; and
- A special e-fapiao is used when VAT can be deducted (the focus of this pilot program).
Up until now, businesses had machines for printing invoices and would send these invoices to their customers or invoices were picked up from the local tax authorities’ office. This was a costly and time-consuming process. Now, taxable persons that are located in the regions included in the pilot program will be able to voluntarily issue these special e-invoices to their customers, regardless of where these customers are located in China. Paper invoices are still in existence and electronic invoicing is still voluntary. If a paper invoice is requested, businesses must accommodate the request and issue paper invoices.
March 2021 VAT updates in Thailand
Thailand has announced the introduction of 7% VAT on foreign digital sales from 1 September 2021. Non-resident sellers of e-services that provide their services in Thailand that are not VAT registered will be liable to register for VAT.
Some of the main points of the new VAT rules are:
- Non-resident e-businesses that provide e-services to non-VAT operators in Thailand will have to register to file VAT returns and pay VAT to the Thai tax authorities;
- If non-resident sellers provide their e-services through an e-platform that supports a continuous process, from payment to the delivery of services, the e-platform operator will now have a responsibility to collect and remit the VAT on behalf of the non-resident sellers;
- The VAT registration threshold for foreign e-business operators is TBH 1.8 million; and
- VAT returns must be filed on a monthly basis and payments must be made on a monthly basis. The deadline for filing and for making payments is the 23rd day of the following month.
These new rules mean that VAT will now be collected on such things as:
- Music/movie streaming services;
- Applications; and
- Online downloading of games
March 2021 VAT updates in the United Kingdom
Fiscal representation post-Brexit
The Tax Authorities in Cyprus issued a formal announcement that UK businesses will not need to appoint a fiscal representative in Cyprus post-Brexit or provide a bank guarantee.
The Polish Authorities have published on 25 February 2021 that UK companies are not obliged to appoint a fiscal representative in Poland effective 1 January 2021.
The Italian Tax Authorities announced that UK established businesses will not have an obligation to appoint fiscal representation for VAT purposes post-Brexit. Typically, non-EU established businesses would be required to have fiscal representation in Italy but we now know that fiscal representation will not be required. UK businesses can VAT register through “direct VAT identification” and no fiscal representative needs to be appointed. Alternatively, UK businesses can choose to appoint a fiscal representative for VAT purposes. This means that pre-Brexit protocols still apply – any UK businesses that are already VAT registered in Italy can continue to use their Italian VAT registration number that was granted to them prior to 1 January 2021.
VAT Payment Deferral Scheme
Last year, it was announced that UK VAT registered businesses that deferred VAT due from 20 March 2020 to 30 June 2020 would have the option to avail of the New Payment Scheme and pay smaller payments over a longer period from March 2021.
Businesses will have to opt into the new VAT deferral payment scheme before 21 June 2021 and can spread their payments over 2 to 11 equal monthly instalments.
The earlier businesses opt-in, the more instalments can be made to spread out the total VAT amount owed:
- Opt-in by 19 March and pay in 11 instalments
- Opt-in by 21 April and pay in 10 instalments
- Opt-in by 19 May and pay 9 instalments
- Opt-in by 21 June and pay 8 instalments
Businesses still have the option to pay the deferred VAT amount in full on or before 31 March 2021. If businesses need extra time to pay, they can contact HMRC before the end of June 2021.
2020 VAT refund
UK businesses can claim a refund of VAT in the EU but the deadline is fast approaching.
UK established businesses claiming EU VAT that was incurred on or before 31 December 2020 must submit their claims by 31 March 2021.
EU businesses that incurred VAT in the United Kingdom during 2020 must also make their refund claims by 31 March 2021.
Making Tax Digital – Soft landing period ends
With the introduction of Making Tax Digital for VAT in 2019, HMRC also introduced a “soft-land period” for businesses to have in place digital links between all parts of their functional compatible software. As the soft-landing period is now fast approaching, digital links should be used between all parts of the business’ functional compatible software from their first VAT return period starting on or after 1 April 2021.
Read the full story here.
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