Archive for VAT news

No VAT for Puerto Rico any time soon

The Puerto Rico Senate has overridden the veto of the Governor – there will be no introduction of VAT in Puerto Rico on June 1. The current Sales and Use Tax as well as the Business Tax will continue after June 1.

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EU ministers agree on VAT Action Plan

All good news from the group of finance ministers of all 28 member states (“ECOFIN”): they enthusiastically embraced the VAT Action Plan that the EU Commission came up with recently (see http://www.us-vat.com/blog/?p=1184).

They have a couple of comments that aim to accelerate the process, which makes sense given that the focus of the VAT Action Plan is on minimizing the “VAT gap” (see http://www.us-vat.com/blog/?p=1065 and http://www.us-vat.com/blog/?p=897). The faster these proposals get implemented, the more VAT revenue flows in the ministers’ coffers!

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No go for Puerto Rico?

Preparing for the planned VAT implementation in Puerto Rico has been a total nightmare for businesses. Many IT departments are currently trying to make sense of the Day 1 requirements, which is assumed to be June 1, i.e. next week.

In the meantime, the PR House and Senate has passed legislation that stops the entire idea of a VAT in PR. Currently, the wait is for the governor to veto. But even if the would do that, there is a procedure for Congress to override the governor’s veto.

But as long as the governor has not signed the legislation that abolishes VAT, we must assume that VAT will happen.

Difficult position to be in, but I’m not ready to advise my clients to call it off…

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EU VAT compliance: list of recent changes

Sovos published a list of recent changes in VAT compliance rules in the European Union – have a look here: http://sovos.com/blog/recent-vat-compliance-updates-may-2016/.

Like The VAT Blog, Sovos has a free subscription service, that automatically sends an email at the time of a new publication. You can sign up for Sovos’ emails through the above link.

Sign up for once-weekly VAT Blog emails here: http://eepurl.com/bcRipD

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VAT unlikely in Puerto Rico – now what?

Puerto Rico is on the brink of NOT introducing a VAT on June 1. The PR parliament has overwhelmingly voted in favor of a proposal to abolish the plans to introduce a VAT, and to stick to the existing Sales and Use Tax system.

However, the governor may veto this proposal.

Our friend Carlos Serrano (cserrano@reichardescalera.com) writes:

“At this time, certainty on the tax consequences of commercial transactions for June 1, 2016 and thereafter is unattainable. The bill, as approved, will hopefully make its way quickly to La Fortaleza to either become law or be vetoed and in the eventuality of the latter, the outcome will continue to be uncertain until a potentially unprecedented vote at both the House and Senate. If anything can be assured, it is that there will not be a dull moment in the long running saga of Puerto Rico’s attempt at a comprehensive tax reform.”

See Carlos’ entire message here:

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Shipping to the UK? Consider the import VAT.

There is a long-standing rule that allows the UK tax authorities (“HMRC”) to claim unpaid VAT from a UK freight forwarder, and it seems that UK freight forwarders are increasing used by HMRC as a forward defense against VAT fraud.

“Recently BIFA [the British International Freight Association, MH] has been contacted by members, which imported goods on behalf of a party outside the EU on a DDP basis. All taxes including VAT were billed back to the origin and the monies never paid, leaving the forwarder out of pocket and goods in free circulation on which VAT had not been paid, undercutting legitimate traders by 20 percent. Then the situation for the import forwarders deteriorated even further as HMRC has demanded payment in full for the unpaid VAT. As there is no other representative in the EU or UK, the forwarder cannot claim the protection of being a Direct Representative, and at best they may be jointly and severally liable as an Indirect Representative, at worst they become Self Representing, with full liability for the Customs debt.”

A couple of weeks ago, at the occasion of the UK Budget, HMRC suggested that evasion of import VAT is a major concern and that they would step up import VAT controls. Moreover, HMRC said that they would come up with an extension of rule that allows for a VAT claim at the freight forwarder – the rule would include “fulfillment houses” like Amazon and eBay.

If the UK gets serious about this (and they will), expect other EU countries to follow.

See for the entire article, with a list of recommendations, here: http://www.handyshippingguide.com/shipping-news/uk-freight-forwarders-warned-of-more-vigilance-by-hmrc-as-vat-and-other-logistics-fraud-increases_7141

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Puerto Rico – VAT to be introduced on June 1

It has been challenging to get reliable updates on the upcoming introduction of VAT in Puerto Rico. The message linked below indicates that PR is pushing forward and that the June 1 date may indeed be the definitive date when VAT will start.

The VAT in PR is not entirely a mirror of the VAT as we know it in Europe and elsewhere. It is rather a mix of Latin American systems. In particular, note the electronic filing system (“SURI”), and the invoicing rules.

EY hits the nail on the head where they say:

“In tandem, the effect on other areas of the business, such as supply chain, system planning and implementation, and compliance management, among others, needs to be analyzed and addressed as part of a company’s VAT readiness efforts.”

https://webforms.ey.com/GL/en/Services/Tax/International-Tax/Alert–Puerto-Rico-issues-new-transition-rules-on-VAT-for-1-June-2016-effective-date

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