ey vat newsletter issue 1 2015

8/9/2019 EY Vat Newsletter Issue 1 2015

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VAT newsletter |January 2015 — Issue 1

EY’s 2014 Worldwide VAT,GST and Sales Tax Guide

You can access the latest guide here.

EY’s Indirect Tax Brieng: areview of global indirect tax

developments and issues,11th editionYou can access the latest brieng here.

Global EuropeEuropean Union — Massive VAT losses highlight need for major changes, Commission says

European Union — Commission report points to opportunities to improve national tax

systems

European Union — EY report on MOSS published by Commission

European Court of Justice — Judgment permits reliance on both domestic VAT law and

direct effect of EU law for sales transactions

Belgium — Supply of gas through a natural gas system

Hungary — Registration

Luxembourg — VAT rate increases

Portugal — Cancellation of proposed VAT rate change

Russia — VAT exemptions for imported scientic research products

Spain — Real-time VAT data from largest companies, corporations

Switzerland — VAT liability and group taxation — changes to the VAT Ordinance as of

1 January 2015

Ukraine — VAT rules for imported medical devices claried

Middle East, India and AfricaNigeria – Exemption on certain stock exchange transactions from VAT

Zambia – 2015 budget proposals

http://www.ey.com/GL/en/Services/Tax/Worldwide-VAT-GST-Sales-Tax-Guide---Country-listhttp://www.ey.com/GL/en/Services/Tax/VAT--GST-and-other-sales-taxes/EY-indirect-tax-briefing-dec-2014http://www.ey.com/GL/en/Services/Tax/VAT--GST-and-other-sales-taxes/EY-indirect-tax-briefing-dec-2014http://www.ey.com/GL/en/Services/Tax/Worldwide-VAT-GST-Sales-Tax-Guide---Country-list


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Americas

Bahamas — Impact of VAT onthe travel sectorEffective 1 January 2015, The Bahamas

is to introduce VAT with a standard rate

of 7.5%. VAT will apply to taxable supplies

made by taxable persons in The Bahamas

as well as applying to taxable importations

by any persons. There are a few important

points that need to be taken into

consideration:

• Hotel accommodation in The Bahamas

(plus ancillary charges) will be subject to

VAT at 7.5%.

• Live entertainment and excursions will

be subject to VAT at 7.5%.

For a copy of the latest guide issued by the

Government of the Bahamas, click here.

Suriname — Introductionof a VATSuriname is planning to introduce a value-

added tax (VAT) Effective 1 January 2016,

pursuant to a recommendation from the

International Monetary Fund (IMF). It is

expected that VAT will replace the current

tax on turnover and that basic foodstuffs

will be zero-rated. There are also plans to

reduce the income tax burden for low-

income earners.

In a press release dated 31 October 2014

concerning its Article IV consultation

with Suriname, the IMF noted that the

introduction of the tax is necessary to

secure the scal and economic progress

that the country has made in recent years.

https://www.bahamas.gov.bs/wps/wcm/connect/cc406e21-a92f-4236-8547-1c550ce91915/VAT+Guidance_Holiday+Accommodation+Tourism+Industry_final.pdf?MOD=AJPEREShttps://www.bahamas.gov.bs/wps/wcm/connect/cc406e21-a92f-4236-8547-1c550ce91915/VAT+Guidance_Holiday+Accommodation+Tourism+Industry_final.pdf?MOD=AJPERES


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January 2015 — Issue 1 VAT newsletter |

India — GST developmentsDiscussions around GST have gathered

pace in India in recent months. The newly

Amended Constitution Amendment Bill was

tabled in the Lower House of the Indian

parliament on 19 December 2014. The bill

is expected to be debated and passed during

the budget session starting February 2015.

The new Government is looking at potential

implementation of GST in April 2016. While

there have been many false alarms around

GST in the past years, this time around, the

Government seems to be serious about its

implementation in April 2016, and industry

interest is very high.

Ernst & Young LLP (India) (EY India)

releases a quarterly magazine called India

Tax Insights. The October-December 2014

quarter was a special GST edition with

some very interesting articles around GST

covering views of industry, experts and EY

India partners.

Visit www.ey.com/indiataxinsights for an

online version of India Tax Insights – GST

special edition. EY India has also launched a

GST external client portal at www.ey.com/

in/GST that is useful for understanding the

India GST developments.

Japan — Postponement ofincrease in consumptiontax rateOn 18 November 2014, Japan’s Prime

Minister Shinzo Abe announced the

postponement of the increase

in the consumption tax rate to 10%. Therate increase was set to take effect as of 1

October 2015. The revised Consumption

Tax Law enacted on 22 August 2012 (the

CTL) prescribed an increase in the tax in

two phases: rst, an increase to 8% as of

1 April 2014, and then an increase to 10%

as of 1 October 2015. However, the CTL

also included an “economic resiliency”

clause that, if applied, would suspend the

implementation of the tax rate increase.

The “economic resiliency” clause subjectsthe increase in the consumption tax to the

condition of improvement in economic

conditions and states that before the rate

is increased, various economic indicators,

such as nominal GDP, real GDP and price

trends, as well as the general state of the

economy, will be considered. Based on

these considerations, the clause states that

necessary measures, including suspending

implementation of the rate increase, will be

taken.

Timing of a future rate increase

The Prime Minister announced that the

consumption tax increase to 10% will

be postponed until 1 April 2017. The

postponement will not include an “economic

resiliency” clause, and there will be no

subsequent postponement. In order to

proceed with the postponement, the law

must be amended during next year’s regula

Diet session, where it will be considered.

Introduction of a reduced tax rate

Consideration of a reduced consumptiontax rate on certain daily necessities such

as foodstuffs is expected to continue. An

idea has been suggested to introduce it

at the same time as the above-mentioned

rate increase to 10%, in light of the time it

would take to design the mechanism and fo

companies to prepare for the changes.

Expected timeline for revisions

regarding cross-border transactions

The topic of services such as digital content

provided by overseas businesses had been

expected to be addressed in the 2015 taxreform. The specic direction of the tax

reform is normally announced in the ruling

party’s outline of tax reform proposals

each December, but this year’s ofcial

announcement is likely to be delayed until

the beginning of next year due to the

dissolving of the current Parliament and the

upcoming election.

Asia-Pacifc

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January 2015 — Issue 1 VAT newsletter |

Thailand — Updated additional tax invoicingrequirements effective 1 January 2015In May 2013, the Revenue Department issued the Director General

(DG) Notication on VAT Nos. 194, 195, 196 and 197 requiring the

VAT operator to enter additional information in their tax invoices,

VAT credit notes and VAT debit notes, as well as their input VAT and

output VAT reports (“VAT documents”).

These additional requirements were for collecting taxpayers’

information so that the tax authority will be able to perform a quick

cross-check of information when the tax audit is undertaken.

These requirements were originally scheduled to come into force

starting from 1 January 2014. However, in late December 2013,

the Revenue Department issued a new set of DG Notications dated26 December 2013 to revoke the previous DG Notications and

defer the implementation date by another year (i.e., 1 January

2015). Under the new notications, key changes are highlighted

below.

Additional contents required in tax invoice, VAT credit notes and

VAT debit notes:

• Tax identication number of the customer who is registered

for VAT

• Identication of business place’s details of supplier and

customer:

• For head ofce, identied as “Head Ofce,” “HO,” “HQ” orve zeroes (“00000”)

• For branch ofce, identied as “Branch Number …,” “br.

no. …” or ve branch number digits as per the customer’s

VAT certicate

Additional information contents required in the input VAT and

output VAT reports:

Input VAT reports:

• Tax identication number of the seller of goods or services

• Identication of place of business of the seller of the goods or

service, which is presented on the tax invoice, VAT credit notes

and VAT debit notes, as “Head Ofce” or “Branch Number …”

Output VAT reports:

• Tax identication number of the customer who is registered

for VAT

• Identication of business place’s details of the customer who is

registered for VAT, which is presented on the tax invoice, VATcredit notes and VAT debit notes, as “Head Ofce” or “Branch

Number …”

In comparison between the old and new notications, the latter

makes more practical sense to VAT operator since the requirement

to add customers’ tax ID number is now limited only to those who

are registered as VAT operators and entitled to recover the input

VAT. This will facilitate compliance by VAT operators since the

required additional information of VAT-registered customers and

suppliers can be cross-checked from database provided on the

Revenue Department’s website — click here.

For further details, please refer to the Notication of the Director

General on VAT Nos. 199, 200, 201 and 202 and VAT reportsthat were attached to the Notication dated 26 December 2013.

Contact EY Indirect Tax Services if you require any assistance on

this matter.

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was entitled, under EU law, to claim VAT bad debt relief.

Further, if the repossessed car was subsequently soldat auction, there was no VAT due under domestic VAT

rules. In its judgment, the CJEU effectively endorsed

the taxpayer’s approach.

Belgium — Supply of gas through anatural gas systemThe Belgian VAT authorities published a new decision

(E.T. 126.566 of 3 October 2014) in which they

comment on the scope of article 38 of the VAT Directive

(article 14 bis of the Belgian VAT code) regarding the

place of supply rules for supplies of gas to taxable

dealers through a natural gas system situated within theterritory of the EU, or any network connected to such

a system. According to article 38 of the VAT Directive,

these supplies are deemed to take place where the

taxable dealer (i.e., the customer) is established. The

Belgian VAT authorities conrmed in the new decision

that article 38 of the VAT Directive covers only the

situation where, at the time of the supply, (i) gas is

located in the natural gas system itself or (ii) gas is

located on board of a vessel that is connected to the

natural gas system. Article 38 of the VAT Directive

cannot be used in other situations (e.g., supply of gas

through natural gas systems located outside the EU or

supply of gas on board of vessels not connected to anEU natural gas system). For these supplies, the default

place of supply rules apply. The decision seems to cover

only the supplies to taxable dealers and not the supplies

to customers not operating as taxable dealers (covered

by article 39 of the VAT Directive).

Hungary — Registration

Foreign taxable persons are currently not required to

obtain a VAT number in Hungary, provided their supply

of goods is performed in VAT warehouses and the

goods are not released from the warehouse, or if the

release is performed to third countries in the framework

of export customs procedures. From now on, foreign

taxable persons may also be exempt from Hungarian

VAT registration if the release was performed under

the legal title of intra-Community supply of goods and

if the remover of the goods agrees with the operator of

the warehouse, in writing, that the warehouse operator

shall take over the reporting of the intra-Community

supply of goods. In such cases the warehouse operator

and the foreign taxable person performing the intra-

Community supply of goods shall be jointly and

severally liable for complying with tax liabilities. There

are additional detailed rules concerning the applicability

of this business model.

Luxembourg — VAT rate increasesEffective 1 January 2015, the standard VAT rate was

increased to 17% from 15%, the intermediate VAT rate

was increased to 14% from 12% and the reduced rate

was increased to 8% from 6%. The super-reduced rate of

3% was not affected by the VAT rate increase. However,

it will not be applicable on the serving of alcoholic

beverages as well as on the construction work of a

house that is intended for renting anymore.


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Portugal — Cancellation of proposed VATrate changeThe planned increase of the Portuguese VAT rate (from

23% to 23.25%, announced on 30 April 2014) will

not now take place. This was announced in the recent

Proposal of the Budget Law for 2015 presented by the

Portuguese Government.

Russia — VAT exemptions for importedscientifc research products

The Russian Government released new regulations on

value-added-tax exemptions applicable to importedproducts. In Decree No. 1096, the Government

approved a list of scientic research materials that

can be imported into Russia on VAT-exempt basis,

the government press service said in an 27 October

statement. Imports of research materials that aren’t

produced in Russia can be exempted from VAT, it said.

Federal Law No. 151-FZ, dated 4 June, amended

Article 150 of the Russian Tax Code, according to the

statement. The amended Subsection 17, Article 150,

which allowed VAT-exempt imports of scientic research

materials into Russia, took effect 1 October, it said.

Spain — Real-time VAT data from largestcompanies, corporationsThe Spanish Tax Agency (AEAT) has announced a

new value-added tax management system that will

require about 62,000 large companies to provide the

tax authorities with “real time” billing information

online. On 20 October, the AEAT said the Immediate

Information Delivery system will enter into force

1 January 2017, following the adaptation of agency

computer systems and the approval of any necessary

regulations.

Switzerland — VAT liability and grouptaxation — changes to the VAT Ordinanceas of 1 January 2015The Federal Council decided on 12 November 2014

to make two important changes to the VAT Ordinance

(VATO) concerning the value-added-tax liability for

foreign companies and group taxation respectively. The

changes came into force on 1 January 2015.

Expanded VAT liability of foreign companies

Effective 1 January 2015, foreign companies

become VAT liable in Switzerland if they carry out

domestic supplies subject to acquisition tax (reverse

charge) and the revenue generated from the supplies

exceeds CHF100,000 per year. This provision shall

apply until the date of entry into force of the revised

VAT law, which will impose an even more extensive

VAT registration liability on foreign companies in

Switzerland.

The current provision in article.10.2.b of the VAT

law stipulates that companies domiciled abroad, thatprovide supplies exclusively subject to acquisition tax,

are excluded from VAT liability in Switzerland. The new

provision art. 9a in the VATO will stipulate that this

will apply only to supplies of and no longer to supplies

of goods.

This provision will affect primarily foreign companies

that conduct work in the construction industry and

services ancillary to construction in Switzerland.

However, the new provision will also affect all foreign

suppliers of electricity or natural gas in pipelines,

as these supplies also are subject to acquisition tax.

Moreover, this will affect foreign companies that rent

out or lease goods, or provide maintenance work inSwitzerland.

Because a potential tax liability in Switzerland has to

be self-assessed, the foreign company has to clarify

its VAT liability in Switzerland and register accordingly

if required to do so. Hence, foreign companies should

carefully consider whether the supplies they render

trigger a VAT liability in Switzerland, and if so, register

for VAT. As regards Swiss companies purchasing

supplies from abroad, it is advisable to practice caution

when the foreign supplier does not invoice Swiss VAT.

In particular there is the risk that the Swiss Federal Tax

Administration levies acquisition tax on the purchase ofsupplies, such as the ones mentioned above, even if the

foreign entity had an obligation to register for VAT in

Switzerland.


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VAT newsletter | 1January 2015 — Issue 1

Nigeria — Exemption on certain stockexchange transactions from VATThe Finance Minister, in exercise of her powers under

section 38 of the Value-Added Tax Act, Cap V1, Laws

of the Federation of Nigeria, 2004 (VAT Act), has

issued an order titled “Value-Added Tax (Exemption

of Commissions on Stock Exchange Transactions)

Order 2014” to exempt VAT on certain stock exchange

transactions for a period of ve years. This exemption

is aimed at encouraging the increase in stock exchange

transactions by bringing down the average cost of

transactions on the stock market.

Zambia — 2015 budget proposalsThe Value-Added Tax (VAT) Act is to be amended to

restrict the deduction of input tax for an intending

trader and provide for the Commissioner General to

make administrative rules on the deduction of input

tax incurred by intending traders. This measure will

restrict input tax deductible by intending traders to

corresponding business lines after the expiry of the

period where one has not commenced trading.

Section 17 of the VAT Act will be amended to clarify

the effective date of charging penalties on delayed

payments of tax due on a VAT return. This measure is

intended to ensure that the penalty for late payment

is linked to the due date of the return. Currently, the

penalty on late submission is linked to the date of

submission of the return instead of the due date of the

payment.

The VAT Act will be amended to provide clarity on what

items qualify for zero-rating under the project funded

by donor funds or co-nanced with the Government.

The measure is intended to clarify that only goods and

services that are deductible under the VAT Act qualify

for zero-rating under the relevant agreements and the

goods/services qualifying are those for the project/

program and not for the contractors, so as to avoid

possible abuse.

Middle East, India and Africa


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VAT newsletter | 1January 2015 — Issue 1

If you would like a copy of a green paper,

newsletter or alerts covering some of the

topics mentioned below, please click on the

link or contact Howard Lambert at howard.

[email protected].

Albania: to Ernst & Young Albania sh.p.k

has recently issued a global Tax Alert

regarding its VAT law that is aimed at

aligning Albania’s domestic law with

European VAT rules. This Tax Alert

highlights the main changes and their

impact on business.

Canada: Tax Matters, November 2014:

Ernst & Young LLP (Canada) has recently

issued the November 2014 issue of its

monthly client newsletter, Tax Matters.

From an indirect tax perspective, this issue

features the following items:

• Time to calculate GST/HST taxable

employee benets

• What boards should know about the

OECD’s BEPS project

• A recent Tax Court of Canada decision

that found trading within an RRSP is notevidence of a trading business

Croatia: EY Tax News: Ernst & Young d.o.o.

has recently published the June 2014

edition of its regular client newsletter, Tax

News. From an indirect tax perspective, the

edition includes the following items:

• Proposed amendments to the Croatian

VAT Act

• Proposed amendments to the Croatian

Real Estate Transfer Tax (RETT) Act

Czech Republic: EY Tax News, October

2014: Ernst & Young s.r.o. has recently

issued the October 2014 edition of its

regular client newsletter, Tax News. From

an indirect tax perspective, this edition

includes the following items:

• Tax code amendment

• VAT amendments — MOSS, VAT rate

amendment, technical amendment

(expansion of reverse-change

mechanism and changes regarding real

estate transfers)

• Tax administrator visits

• Summary and implications of the recent

Scandia CJEU judgment

Estonia: VAT — Obligation to declare €1,000

invoices.

France: France is progressing on the

expansion of electronic data processing

audit, and this applies also to companies

that are solely VAT-registered in France.

This is a hot topic since it applies to tax

audits that have been taking place since the

beginning of 2014.Germany: VAT Newsletter, September

and October 2014: VAT Newsletter

issued by Ernst & Young GmbH

Wirtschaftspruefungsgesellschaft that

includes details of changes to the German

annual VAT return.

Ghana: On 19 November 2014, the 2015

Budget Statement and Economic Policy of

the Government of Ghana were presented

to the Ghanaian Parliament. This includes

the imposition of value-added tax (VAT)

on fee-based nancial services and theimposition of a 5% at VAT rate on real

estate transactions.

Hungary: EY Tax Express: 10/2014 and

10/2015: Ernst & Young Tanácsadó

Korlátolt Felelõsségû Társaság has issued

the latest edition of Tax Express that

summarizes the most signicant tax

changes expected for 2015.

Ireland: VAT treatment of cross-border

intracompany transactions involving a VAT

group — tax authority view.

Latvia: Tax Newsletters, September andOctober 2014.

Malaysia: 2015 budget proposal: On 10

October 2014, Malaysia’s Finance Minister

delivered the 2015 budget speech. This

included details of the expanded scope of

items that are not subject to GST. A global

Tax Alert that outlines the key items in the

budget is now available on ey.com and can

be shared with your clients.

EY newsletters and alerts

mailto:howard.lambert%40ey.com?subject=mailto:howard.lambert%40ey.com?subject=mailto:howard.lambert%40ey.com?subject=mailto:howard.lambert%40ey.com?subject=


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January 2015 — Issue 1 VAT newsletter | 1

Netherlands: Tax Update Weekly: Weekly

client e-newsletter — Issues 41 through

48, all from 2014 — a roundup of VAT

news from the Netherlands, EU and other

countries.

Slovakia: EY Tax News, July 2014. Ernst &

Young k.s. (EY Slovakia) has recently issued

the July 2014 issue of its regular client

publication, EY Tax News. The following

items may be of interest from an indirect

tax perspective:• Opinion of the Advocate General (AG)

on the possibility of xed establishment

creation for VAT purposes

• The Financial Directorate’s new guideline

on VAT ledger

Slovakia: EY Tax News, August 2014: EY

Slovakia has recently issued the August

2014 issue of its regular client publication,

EY Tax News. The following items may be of

interest from an indirect tax perspective:

• Court of Justice of the European Union

(CJEU) judgment on Skandia: VAT due

on intragroup supplies

• Upcoming changes to the VAT Act – how

could you be affected?

• Workshop – tax obstacles in retail

business

Slovakia: Tax News, September 2014:

EY Slovakia has recently issued the

September 2014 edition of its regular client

newsletter, EY Tax News. From an indirect

tax perspective this edition includes an

item on CJEU case C-492/13 Traum EOOD

regarding the VAT treatment on intra-

Community supplies where transactions

were subsequently found to be fraudulent.

UK: VAT News, weeks ending 13 October

2014, 20 October 2014, 27 October 2014,3 November 2014, 17 November 2014

and 24 November 2014. Weekly client

e-newsletter — a roundup of VAT news from

the UK, the EU and other countries.


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EY | Assurance | Tax | Transactions | Advisory

About EY

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transaction and advisory services. The insights

and quality services we deliver help build

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we play a critical role in building a better workingworld for our people, for our clients and for our

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visit ey.com.

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ED None

This material has been prepared for general informational

purposes only and is not intended to be relied upon as

accounting, tax, or other professional advice. Please refer to

your advisors for specific advice.

US VAT practice leaders:

Karen Christie

New York, NY

+1 212 773 5552

[email protected]

Ronnie Dassen

New York, NY

+1 212 773 6458

[email protected]

Anne Freden

San Francisco, CA

+1 415 894 8732

[email protected]

Ela Choina

Chicago, IL

+1 312 879 2935

[email protected]

Gino Dossche

New York, NY +1 212 773 6027

[email protected]

Regional resources:

Alex Cotopoulis

New York, NY

+1 212 773 8216

[email protected]

Maria Hevia Alvarez

New York, NY

+1 648 831 2187

[email protected]

Deirdre Hogan

San Francisco, CA

+1 415 894 4926

[email protected]

Corin Hobbs

San Jose, CA

+1 408 947 6808

[email protected]

Howard Lambert

Irvine, CA +1 949 437 0461

[email protected]

Steve Patton

New York, NY

+1 212 773 2827

[email protected]

Peter Molnar

New York, NY

+1 212 773 1329

[email protected]

Ernst & Young LLP
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ey vat newsletter issue 1 2015

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