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We'll Be With You (In)Directly...

Kitty Miv, Editor
09 October, 2020

This week was another busy one in the tax world, on the VAT and indirect tax front especially, starting with the launch of the European Commission's Customs Union Action Plan, which includes a proposal to strengthen the reporting obligations on payment service providers and online sales platforms.

The Commission explained that in order to help in the fight against cross-border tax fraud, as well as customs fraud, it is seeking to ensure that customs authorities will have access to the data that from 2024 payment service providers will be obligated to provide to the tax authorities of EU member states. The Commission will also put forward plans to introduce new customs reporting requirements for online marketplaces.

The EC further noted that its new VAT e-commerce package will be implemented from July 2021, with customs legislation and IT systems are being adapted to cater for these new VAT rules.

Meanwhile in the UK, while things are gearing up to get more complicated on pretty much all fronts, the tax authority sought to provide clarity on certain aspects of the VAT rules, including with regard to the new reverse charge regime for the building and construction industry, now set to come into force in March 2021. (Originally due to be in place from October 2019, the measure had been postponed to October 2020. But now here we are, so...)

HM Revenue and Customs released three publications offering in-depth guidance on the introduction of the VAT reverse charge mechanism on the supply of building or construction services.

Under the new regime, in order to remove the possibility of "missing trader" fraud, a VAT-registered business which supplies certain construction services to another VAT-registered business for onward sale will be not be required to account for VAT, but must issue an invoice stating that the service is subject to a domestic reverse charge.

The recipient of the supply must account for the VAT due on the supply through its VAT return, instead of paying VAT to the supplier. The recipient may also recover that VAT amount as input tax, subject to the normal rules for claiming credit.

For businesses to be excluded from the reverse charge because they are end users or intermediary suppliers, they must inform their sub-contractors in writing that they are end users or intermediary suppliers.

In Switzerland, in order to assist the business community in dealing with the ongoing economic fallout of the COVID-19 pandemic, the Federal Tax Administration (FTA) revealed that it will prioritize requests for the early payment of VAT refunds.

Excess VAT credits are usually paid out automatically after 60 days, but earlier this year, the FTA announced that requests for early reimbursement would be examined immediately and paid out quickly. The FTA revealed that during the pandemic so far, it has received 470 requests for the early reimbursement of VAT credits, and explained that the concession has been particularly helpful for exporters.

And last, but by no means least, Saudi Arabia has revealed that it will exempt sales of real estate from the newly hiked fifteen percent VAT, instead imposing a five percent sales tax on such transactions. According to the Government announcement, first-time buyers will be exempt from the tax on properties worth up to SAR1m.

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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