Ask me anything about VAT

Did you see my homepage at www.us-vat.com?

If you want to connect in person, there are plenty opportunities to reach out to me – I am only a click away.

You can send an email to mark@us-vat.com, or give me a call on 646-397-5855. You can use Skype – my skype name is markhoutzager.

Please sign up for my email list (under “Subscribe” in the right column) if you are interested in Value Added Tax in general, and its impact on U.S. companies in particular.

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Low Value Consignment Relief reconsidered?

Most countries have some form of threshold for import VAT – if the value of a shipment is below the threshold no import VAT is due. The reason is that the compliance costs and the cost of customs collection and administration exceeds the tax revenue.

The European Commission has now concluded a study, that shows that about half a billion Euro (these days only somewhat more than about half a billion USD) in tax revenue is missed annually due to this relief.

Politically it would make sense for the Commission to look into lowering the threshold, but the report doesn’t say anthing about the additional colection costs.

The summary is here:

Download (PDF, 552KB)

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A hybrid SUT / VAT for Puerto Rico?

I know that more than a few clients of mine are trying not to lose track of the developments in Puerto Rico. The various proposals for indirect taxes that have been doing the rounds recently are all very interesting, but the key for businesses is how all this can be timely implemented in the ERP / accounting system.

Grant Thornton produced a brief less-than-one-page overview – this is the current position and there is nothing more to say at this time…

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New VAT guidance for U.S. e-businesses

The new EU rules for VAT on digital services have been a source of discontent and confusion, and various publications and even “action groups” have taken the opportunity to publish inflammatory and at best incorrect materials on the Internet. However, this is mainly a compliance issue for smaller EU-based e-businesses.

For U.S. based sellers of e-services (intangibles) to overseas individuals, nothing has changed in terms of the taxation rules. VAT is due at the rate of the customer’s country, and that hasn’t changed over the past 11 years.

What did change is that there are now a few more countries that require VAT collection. I refer to Tom Borec’s blog here: http://ebiz.tax/e-commerce-tax-australia-japan-israel-turkey-india-eu/ with more information on non-EU countries.

The other thing that changed is the compliance system in the EU that were used for the VAT filings of U.S. e-businesses. What was called “VOES” is now “MOSS” (“Mini One Stop Shop”).

Most US e-businesses have registered in the UK for filing their EU VAT obligations. As you know, VOES (and now MOSS) allow for a single VAT registration, and through that one registration VAT revenue will be distributed among 28 EU member states. US e-businesses overwhelmingly chose the UK, assuming that filings will take place in English. (Although one of my clients called me a few weeks ago, asking for an explanation for “some English lingo that I am not familiar with”)

MOSS is not a whole lot different from VOES, but it is useful to review these VAT filing guides issued by the UK VAT authorities:

https://www.gov.uk/government/publications/vat-mini-one-stop-shop-non-union-return-guides

and this is the MOSS return template:

https://www.gov.uk/government/publications/vat-mini-one-stop-shop-non-union-return

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UK Indirect Tax survey results published

This survey from Deloitte UK is focused on UK businesses (and in particular on the financial services industry), but the results are nevertheless interesting for a much broader audience.

For example, 10% of the UK-based respondents has responsibility for US sales tax; and 40% of the respondents has not been asked by any stakeholder to justify their indirect tax strategy. Also, timely and accurate submission  of VAT/GST returns is rated much higher than saving money for the organization.

Deloitte says:

“Our findings continue to demonstrate a number of recent trends. One of these is the importance of the relationship with HMRC, which for most of our respondents is in good shape, and stable. Another consistent trend is that indirect tax continues to be a topic of discussion at board/senior management level and with other stakeholders. Also, indirect tax professionals continue to rate compliance and improving systems as their top priority.”

See the entire report here:

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In Singapore until June 5

It is always exciting to return to the birthplace of my first-born! I will be in Singapore until June 5 on client business – and also to speak at PWC’s Asia Tax Conference on May 26 in the Pan Pacific Hotel at Suntec.

If you are in Singapore – I would love to meet up for drinks or otherwise! Please email me at mark@us-vat.com.

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Puerto Rico tax now 11.5% – but still a VAT?

As I mentioned earlier, developments are following fast in the VAT world of Puerto Rico. This week’s proposal is for 11.5% tax on sales and 10.5% tax on imports.

“Essentially, the plan would increase the existing 7% sales & use tax (IVU by its Spanish acronym) to 10%, while adding 1.5% for municipalities. Meanwhile, the tax collected at the ports, currently at 6% and charged through PICO (Spanish acronym for Integrated Merchant Portal), will increase to 10%, plus a 0.5% for municipalities, according to Treasury Secretary Juan Zaragoza.

The hike to 11.5% would to be completed in “30 days to 45 days” after legislative approval, which the governor said he expects “within the next few days.””

Now, are we still talking about a credit-invoice based VAT, or is this proposal simply an increase of the existing sales tax and port tax rates?

See for more here: http://www.caribbeanbusiness.pr/news/legislative-conference-agrees-on-11.5-percent-sales-use-tax-110335.html

and if you read Spanish:

http://www.elnuevodia.com/noticias/politica/nota/vaelivuagrandadode115-2047587/

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India GST delayed…

Just when we blinked and thought that passage of the India GST bill was all but imminent, a crucial vote failed to get a parliamentary majority.

The initial target date of April 2016 may now not be met. Given the lack of detail required for a successful implementation, this is probably not a bad development.

http://www.vatlive.com/asia-pacific/india-gst-setback-puts-april-2016-implementation-in-doubt/

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