embroiled in turmoil
Kitty Miv, Editor
05 September, 2019
In last week's column we stuck to the (relatively) safer territory of tax developments in the United States, side-stepping the political turmoil taking place in the UK, and the political bemusement with which the remainder of the European Union is regarding the situation. Given that things this week are even further embroiled in turmoil (Is turmoilier a word? If not, it should be...) it may be wise to do the same this week. At some point, I'll have something insightful and authoritative to say on the Brexit situation. Now is not that time.
And so, moving swiftly on, value added tax seems like as good a place as any to start, with the news that Nigeria will be imposing VAT on online transactions from next year.
Commenting in late August at an African Tax Administration workshop, head of the Nigerian Federal Inland Revenue Service (FIRS), Babatunde Fowler explained that banks will be asked to withhold VAT on online transactions from January 1, 2020. However, although the tax authority has reportedly already started to engage with stakeholders on the proposal, it will need to be approved by Parliament before it can be implemented.
Meanwhile in Europe, on August 29, legislation was signed into law providing for numerous changes to value-added tax rules.
The legislation included the introduction of a mandatory VAT split payment mechanism on certain supplies, whereby when a taxable person acquires goods or services from another taxable person, the portion of the payment to the supplier that is VAT will be deposited separately and automatically to a dedicated account of the seller, in order to satisfy the VAT that is required to be remitted to the tax agency.
Under this mechanism, it was announced, split payments will be mandatory for supplies that are currently subject to the reverse charge mechanism, including:
- construction services;
- European Union emissions trading allowances;
- automotive parts and accessories;
- coal and coal products; and
- electronic machinery and equipment and their parts.
The legislation also includes numerous measures intended to simply VAT rules, including through:
- the use of the European Union Combined Nomenclature to identify goods for VAT purposes;
- the use of the latest version of the Polish Classification of Products and Services (PKWiU 2015) to identify services;
- taxing related groups of goods and services at the same VAT rate; and
- expanding the scope of the flat rate scheme for farmers.
In addition, the legislation will cut VAT rates on numerous basic items, including:
- tropical and citrus fruit from eight to five percent;
- certain bread products from 23 or eight percent to five percent;
- soups, broths, and homogenized food from eight percent to five percent;
- mustard, sweet pepper spice, and some processed spices from 23 to eight percent;
- baby and infant products including baby food, nappies, and car seats from eight to five percent; and
- adult hygiene products from eight to five percent.
Furthermore, the legislation reduces VAT on e-books from 23 to five percent, and on electronic news from 23 to eight percent.
According to the Polish authorities, the split payment mechanism and the reduced VAT rate for electronic publications will apply from November 1, 2019, with the VAT simplification measures applying from April 1, 2020.
Then finally in Bahrain, which only introduced its VAT regime at the start of this year, new guidance on was released the VAT rules for the real estate sector.
The guidance includes an overview of the VAT rules, applicable rates and procedures in relation to the real estate sector in Bahrain and how to comply with them, and explains how to determine how a supply is treated for VAT purposes.
Lucky Bahraini taxpayers, eh, receiving clear, concise information! Chance would be a fine thing elsewhere in the world...
Until next week!
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