Global VAT Guide: September 2021 VAT Updates
September 2021 VAT Updates in Cyprus
Cyprus will implement mandatory e-invoicing for public and private suppliers to the public procurement sector (B2G sector) from 1 January 2022.
Since April 2019, central governmental entities have been required to process invoices received from their suppliers electronically. In April 2020, this obligation was extended to all other public agencies.
Under current requirements, suppliers are not obliged to issue e-invoices. The recipient processes the invoices manually. This will change from 1 January 2022. The implementation of e-invoicing for B2G suppliers is a step forward in the Cypriot government Digital Strategy and the next expected step is the implementation of B2B e-invoicing.
September 2021 VAT Updates in Italy
The authorities in Italy passed a new budget law at the end of 2020 and this law proposed changes to Italian tax reporting. This included the withdrawal of Esterometro from the beginning of 2022. The Esterometro is a quarterly report that is submitted to the Italian Revenue Agency that contains details of cross-border business transactions.
From 1 January 2022, foreign transactions must be sent reported in SDI (Sistema di Interscambio). At present, businesses can report their cross-border payments through SDI. This will become mandatory at the beginning of 2022. There will be a penalty for non-compliance. For each missed invoice, there will be a €2 penalty with a maximum penalty of €400 per month. This only applies to Italian taxpayers, if you are registered in Italy with an Italian VAT ID. These rules do not apply to non-residents.
September 2021 VAT Updates in Poland
As mentioned in last month’s newsletter the SLIM VAT 2 package was signed by the President and will be introduced on 1 October 2021. SLIM VAT 2 will also bring some changes to invoicing.
Some of the changes include:
- There is no requirement to put the word “duplicate” on an invoice when the original invoice has been damaged or lost;
- There is no requirement to put the words “correction” or correcting invoice” on a corrective invoice and there is no requirement to specify the reason for the correction;
- Taxpayers will be allowed to issue invoices no earlier than the 60th day before the delivery of the goods or date in which a service is being carried out. This is currently set at 30 days.
September 2021 VAT Updates in Portugal
Portugal is currently in the process of expanding their e-invoicing system. Portugal has adopted a phased approach in rolling out e-invoicing for B2G supplies:
- January 2021 – e-invoicing was applied to large companies;
- July 2021 – medium size enterprises were also included; and
- July 2021 – non-resident VAT registered businesses must also comply with the e-invoicing rules.
Invoices for B2G transactions must be issued electronically, in a specific format and must be transmitted through the online portal. Adding to this, Portugal has announced the implementation of the ATCUD code. This will be a unique ID number that companies will need to include on every invoice. The ATCUD code must be included on invoices from 1 January 2022. Taxpayers need to ensure they have their ATCUD code before the end of 2021 to ensure they have this for January 2022.
From 1 January 2022, the inclusion of QR codes will also be mandatory on all invoices. Portugal will complete the rollout of e-invoicing for B2G supplies to include micro-entities by 1 January 2022. From this date, all B2G suppliers, irrespective of their size, are required to apply e-invoicing rules. Portugal has also announced, PDF invoices will be accepted until 31 December 2021.
September 2021 VAT Updates in Spain
A preliminary draft law has been drawn up that will target e-invoicing and will change some of the current regulations. The draft law includes a proposal to extend the obligation to issue e-invoices to the B2B sector. This will benefit companies and the Spanish authorities:
- Companies will have better traceability over their payments; and
- The Spanish authorities will have reliable information and can monitor payments more closely
The move to B2B e-invoicing will take some time and the Spanish government are aware of this and will allow for a grace period. Companies with an annual turnover over than €8 million will have one year to prepare and transition to e-invoicing after the publication in the BOE, the State Official Gazette. Companies and self-employed persons with an annual turnover less than €8 million will have a transitional period of three years after the publication in the BOE, the State Official Gazette. The draft law is open for public consultation. Taxpayers can send their feedback until 6 September 2021. It is expected the government will pass the draft, or an amended version and companies will then need to begin preparations for B2B e-invoicing.
September 2021 VAT Updates in Indonesia
On 16 August 2021, Indonesia’s Finance Minister delivered the 2022 Budget speech to the House of Representatives. The speech highlighted the country’s need for reforms, improving taxpayer’s compliance and expanding the tax base by introducing tax measures and incentive. It is expected that the reform measures announced by the Finance Minister in June will be implemented. These included:
- The increase of the standard VAT rate from 10% to 12%;
- The removal of most VAT exemptions; and
- The introduction of 5% to 25% rates on some goods and services.
Some of the reasons why the Finance Ministry is planning to raise the VAT rate are:
- By increasing the VAT rate, the government will see an increase in overall revenue and this will in turn help the budget deficit;
- The current VAT rate of 10% is relatively low in comparison to other countries; and
- Indonesia has not optimised VAT revenue. It has been estimated that Indonesia only generates 60% of its potential in terms of VAT revenue.
September 2021 VAT Updates in Ukraine
From 1 January 2022, non-residents that do not have a permanent establishment in Ukraine that provide electronic/digital services in Ukraine to individuals will be subject to VAT at 20%. If the revenue from the supply of electronic/digital services in the previous calendar year is greater than the equivalent of UAH 1 million, an application for VAT registration must be filed. The VAT registration deadline is 31 March of the year following the year that the threshold of UAH 1 million was exceeded.
Some examples of electronic/digital services are:
- Delivery of advertising services on the Internet and mobile apps;
- The supply of software and software updates;
- The delivery of cloud services using cloud computing technologies;
- Granting access to databases
- This includes the use of search engines and directory services on the Internet; and
- Providing electronic copies or granting access to images, texts and information
- This includes subscriptions to electronic newspapers, magazines and books; and
- Providing access to downloading of photographs, images and videos;
Returns must be submitted electronically within 40 days of the last day of the reporting period.
Work with real VAT experts
With over 15 years’ experience in the area of VAT compliance and consultancy, we handle all countries and languages where VAT obligations exist. We have a dedicated & centralized team of VAT experts, with a reputation of excellence within all global tax offices ready to speak to you about your VAT obligations.
For over 25 years Taxback International has been a world leader in VAT consultancy and compliance providing expert support to more than 12,000 global clients including Apple, Google, IBM, and Twitter.
With increasing digitalization of global tax processes, we have developed tailored technology solutions to solve challenges facing companies today.