Global VAT Guide: September 2022 VAT Updates

September 2022 VAT Updates in The Netherlands

The Dutch Tax authorities published a leaflet in relation to the reasons for additional assessments.

The information leaflet discusses:

• An additional assessment;
• How an additional assessment was calculated; and
• How the entrepreneur can object.

Normally the taxpayers receive this additional assessment for turnover tax because according to the Tax office systems:

• Their VAT declaration has not been received or has not been received on time;
• Their VAT payment has not been received or has not been received on time, or have only been received part; and
• Their VAT declaration and payment have not been received on time or in full.

The Dutch Tax authorities also provided guidance on their web page, explaining:

• The taxpayers can still file their tax returns (even if they have nothing to declare);
• How taxpayers can check their additional assessment;
• How to check whether you have made a payment with the correct payment reference;
• How to calculate whether you have to pay and how much;
• Whether it is wise for you to object or request a postponement of payment; and
• Which post you can expect from the Tax office.

September 2022 VAT Updates in Slovenia

The Slovenian administration has published a Proposal for a Regulation act on amendments of the Tax procedure act as to implement Council Directive (EU) 2021/514 of 22 March 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation (32021L0514).

This proposal relates to new rules on the information exchange on income that is generated by digital platform sellers (DAC7).

These new rules will apply to digital platforms that are located inside and outside the EU and if the rules come into effect, it is thought these rules will apply from 1 January 2023. The Draft Legislation is subject to public consultation in the period 1 August – 19 August 2022.

September 2022 VAT Updates in Chile

On 7 July 2022, it was published (Message No 064/370) whereby the project of Bill for Taxation Reform was announced and the legislation adoption process initiated.

The VAT-related measures aim to:

• Simplify Registration and filing process of non-established digital services providers; and
• Ensure VAT is collected.

September 2022 VAT Updates in Columbia

Columbia announced early in 2022 that there would be three VAT-free days in 2022 – 11 March, 17 June and 2 December 2022.

These days, sales of popular goods would be exempt from the standard 19% VAT rate.

The new Columbian government have introduced a new proposal that would see the end of the three-day VAT holiday.

September 2022 VAT Updates in India

16 States/UTs have confirmed that will reduce VAT on aviation fuel

• Andaman and Nicobar Islands, Arunachal Pradesh, Dadra and Nagar Haveli and Daman and Diu, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir; Jharkhand, Karnataka, Ladakh, Madhya Pradesh, Manipur, Mizoram, Tripura, Uttar Pradesh and Uttarakhand.

Domestic Maintenance, Repair and Overhaul (MRO) services:

• GST rate has been reduced from 18% to 5%
  • MRO services: Aviation-related services that include overhaul, repair, inspection or modification of an aircraft or aircraft component to keep it operational and airworthy.

September 2022 VAT Updates Israel

From 1 August 2022, the cash payment amount that can be used in one business transaction has been reduced from 11,000 sheckles to 6,000 sheckles.

If a payment to a business totals more than 6,000 sheckles, the payment must be made using a different method other than cash.

 The 6,000 threshold for cash payments does not apply to transfers between families.

For businesses that are not registered for VAT, the threshold for cash payments is 15,000 sheckles.

The threshold for rent payments and transactions between private individuals has been reduced from 50,000 sheckles to 15,000 sheckles.

This new measure is hoped to tackle tax evasion and encourage people to use digital methods for payment.

Fines will start at 15% of the cash payments lower than 25,000 sheckles for those who violate this new law.

Fines will rise to 20% for cash payments between 25,000 to 50,000 sheckles and 30% for larger payments to those who violate this new law.

September 2022 VAT Updates in Malaysia

Sales Tax (Amendment) Bill 2022 adopted on 4 August 2022 updates the Sales Tax Act 2018 with a provision to tax low-value goods sold online and delivered to Malaysia – sellers of imported goods not exceeding RM500 to charge 10% Sales Tax.

This update will come into effect on 1 January 2023.

September 2022 VAT Updates in Norway

The Norwegian government proposes to abolish the VAT exemption for electric cars as of 1 January 2023 and replace the exemption with a subsidy scheme.

The subsidy scheme aims at a level of support that corresponds to a VAT exemption up to a purchase price of NOK 500,000. This means that only the most expensive electric cars will increase in price.

The change will come into force from 1 January 2023, if it is adopted.

September 2022 VAT Updates in The Philippines

On 11 July 2022, Senate Bill No. 250 imposed Value Added Tax on Digital Services.

This new bill will see the introduction of a 12% VAT rate on non-resident digital and electronic services providers to Philippine customers.

On 17 Aug 2022, the Philippines News Agency announced that during a hearing the House Committee on Ways and Means approved House Bill No. 372, filed by the committee’s chairperson.

Digital services include online licensing or software, updates and add-ons, website filters and firewalls, mobile applications, video games and online games, and webcasts and webinars.

It also includes the provision of digital content, such as music, files, images, text, and information; online advertising spaces; electronic marketplaces; search engine services; social networks; database and hosting; and online training.

“The measure also aims to strengthen tax compliance through simplified invoicing and registration requirements for VAT-registered non-resident DSPs,” the author of the bill said.

If this becomes law, the National Internal Revenue Code of 1997 will be amended as to allow imposing value-added tax (VAT) on digital or electronic transactions and services.

September 2022 VAT Updates in Switzerland

The Swiss tax authorities published the schedule on the planned Legislative and regulatory changes for 2023-2025.

The planned changes in relation to VAT are:

• As of 1 January 2023, the turnover limit up to which non-profit, voluntary sports and cultural clubs and charitable institutions are exempt from VAT has been raised by Parliament from CHF 150,000 to CHF 250,000;
• As of 1 January 2024, with the change in the Value Added Tax Ordinance, the first step is to regulate when which processes will only be possible electronically;
• As of 1 January 2024, this partial revision implements various parliamentary initiatives in the area of value-added tax. The focus is on the collection of value-added tax by mail order platforms and the obligation to provide information on all Internet platforms. Furthermore, simplifications for SMEs such as voluntary annual accounting and measures to combat fraud are planned;
• As of 1 January 2025, the secrecy provision of the Value Added Tax Act is to be amended so that the FTA can automatically report individual companies to the Federal Statistical Office and the commercial register authorities that declare sales of at least CHF 100,000 for VAT but are not entered in the commercial register.

September 2022 VAT Updates in The United Kingdom

UK Increasing Late Payment and Repayment Interest Rates

The Bank of England Monetary Policy Committee voted on 4 August 2022 to increase the Bank of England base rate to 1.75% from 1.25%.

HMRC interest rates are linked to the Bank of England base rate.

As a consequence of the change in the base rate, HMRC interest rates for late payments will increase.

These changes will come into effect on:

• 15 August 2022 for quarterly instalment payments; and
• 23 August 2022 for non-quarterly instalments payments.

The repayment interest rate will increase to 0.75%.

The repayment rate is set at Bank Rate minus 1%, with a 0.5% lower limit.

Information on the interest rates for payments will be updated shortly.

Information letters sent to taxpayers by HMRC on the switch to the new Customs Declaration Service from Oct 2022

HMRC sent information letters to taxpayers on the switch to the new Customs Declaration Service from October 2022.

The Customs Declaration Service is a modern, secure IT platform that replaces the Customs Handling of Import and Export Freight (CHIEF).

CHIEF will close in two phases:

• Phase one: after 30 September 2022, the ability to make import declarations will end; and
• Phase two: after 31 March 2023, the ability to make export declarations will end.

Taxpayers need to find out if they are still using CHIEF.

If they are, they should follow the steps in the Trader Checklist to make sure they can move their declarations to the Customs Declaration Service before CHIEF closes.

The necessary steps should be taken now as it can take time to complete the move, or they may not be able to continue trading once CHIEF closes.

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