Indirect Tax Issues Of Interest

VAT, GST and other indirect levies have dominated the tax headlines this week, with some countries, such as Belgium, putting in place supports to bolster the industry sectors impacted the most by the COVID pandemic, such as hospitality and tourism.

To this end, the Belgian Government announced that it would temporarily cut the VAT rate for certain restaurant and catering services from May 8, 2021, with the reduced six percent rate to be in place until September 30, 2021.

The supply of drinks for consumption on site will also benefit from the reduced rate. The supply of beer with an alcoholic strength by volume greater than 0.5 percent and other drinks with a strength by volume exceeding 1.2 percent will remain subject to the standard VAT rate of 21 percent.

Meanwhile, the broader European Union is gearing up for the July introduction of various measures contained in the bloc's e-commerce reform package, with the Directorate-General for Taxation and Customs Union (DG TAXUD) issuing a statement highlighting how businesses can benefit and comply with the new rules being introduced for e-commerce.

DG TAXUD explained that, to support businesses to comply with the changes, the EU has developed new online tools where businesses can register and take care of their VAT obligations for all their sales in the EU. This replaces the previous system whereby online companies were obligated to register for VAT in each EU country before they could sell to consumers there. The new system – the One Stop Shop (OSS) – should save EU businesses up to EUR2.3bn a year in compliance costs, the EU predicts.

In China, the authorities unveiled plans to boost the manufacturing sector, by expediting VAT refunds for advanced manufacturing ventures with a good history of compliance that have accumulated input tax credits.

The policy, announced in Announcement No. 15 of 2021 in Chinese, applies with effect from April 1, 2021, and enables taxpayers engaged in specified activities to receive a VAT refund in May 2021 to the extent they have accumulated excess input tax credits compared with the value of such credits as at March 31, 2019.

The policy is designed to benefit producers and retailers of non-metallic mineral products; specialist equipment, including railway, ship, and aerospace businesses; high-tech electronic equipment; medicines; and chemical fibers, among others.

Finally in India, understandably, the focus was on GST interventions in relation to COVID-19, with various tax relief measures announced for goods and service taxpayers, including that interest on late tax payments will be reduced, and the due date for various filings extended.

Until next week!