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Tax the Zeros and the Ones Will Take Care of Themselves?

Kitty Miv, Editor
25 June, 2021

As Europe gears up for the introduction, on July 1, of its package of VAT reforms for e-commerce, it makes sense that the electronic provision and taxation of goods and services is uppermost in the minds of many, and it is on this issue that we will be focusing this week.

We begin in Hungary, where lawmakers were recently reported to have approved a proposal to more than halve the rate of tax that applies to gains from virtual currency asset investments.

Under the measure, the current 30.5 percent rate of capital gains tax that applies to virtual currency assets will be more than halved, to 15 percent.

With an honorable mention for Nigeria, which recently launched a new electronic registration, filing and payment portal, TaxPro-Max, we return to the EU, and to Austria, where the authorities have expressed their readiness to implement the imminent VAT e-commerce package.

Austria's Ministry of Finance released a statement for taxpayers on the upcoming changes to the country's value-added tax regime for e-commerce.

The changes are being introduced across the European Union from July 1, 2021. They are intended to simplify VAT rules for goods sold online and introduce new obligations on online marketplaces to require them to contribute in the fight against tax fraud.

In its June 14, 2021, statement, the Ministry said Austrian authorities are ready to implement the changes. It noted a doubling in the volume of packages reaching Austrian borders between 2019 and 2021. This, it said, demonstrates the need for action to ensure fairness for domestic brick and mortar stores, which it hoped would be supported by the removal of the VAT exemption for low value consignments of under EUR22.

"From July 1, 2021, the implementation of new EU customs regulations will lead to the tax now being levied on goods with a value of 1 cent and upwards. The move will help fight fraud and promote fiscal fairness," the Finance Ministry suggested.

Meanwhile, in Spain, the Government has gazetted rules for taxpayers regarding the country's digital services tax.

Spain introduced its digital services tax through Law 4/2020, of October 15, on the Tax on Certain Digital Services, which became effective on January 16, 2021.

The digital services tax mirrors the design proposed by the European Union. The tax applies at a rate of three percent on certain digital services provided by companies with global annual turnover of at least EUR750m (USD893m) and Spanish revenues from such services of EUR3m or more. It is targeted at digital companies providing advertising services, selling user data for advertising purposes, or performing intermediation services.

Finally, we conclude our journey down the taxation... sorry... information superhighway in Ukraine, where legislation has been approved establishing new value-added tax obligations for overseas suppliers of business-to-consumer electronic services that will apply from January 1, 2022.

Under the new regime, signed off by the Rada on June 14 and sent to the President for signature, supplies of certain electronic services to consumers in Ukraine will be liable to VAT, with the exception of online education services. Non-resident suppliers will be obligated to register for VAT purposes, under a simplified procedure on the tax agency's web portal.

Until next week!


About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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