Archive for VAT news

GST in India – probably not in 2016

Even though the local politicians say that GST in 2016 is “certainly doable”, Avalara reports that GST in India is unlikely to happen in 2016:

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EU VAT rates per 1/1/16

The Commission has yet to update their list of VAT rates, but the intrepid folk at Accordance recently published the list – see here:

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KPMG on VAT and Customs in China

While China has confirmed that the VAT / business tax integration will be finalized in 2016, KPMG China has set their sights on VAT in the longer term. This is an interesting article where KPMG reviews current international tax trends and applies these to China – recommended reading!

They have also provided an update on the current customs landscape in China:

Both articles are recommended holiday reading!

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India GST: “Certainly doable” in 2016

There is still hope for GST in India: the Finance Minister is working with Congress to get to the required votes.

Have a look at an interview with the Minister here, with more dtails:

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EU tax advisers can work throughout the EU

One of the frustrations in the day to day practice of a European tax adviser is that tax authorities in other EU countries don’t want to talk. A number of countries, most notably Germany, have a habit of only communicating to local tax advisers. Best case they would only allow “temporary and occasional assistance”.

I could understand if the issue would be language, which is easily solved as most EU advisers speak multiple languages (well, except the Brits and the French), or if the issue would be knowledge of local rules (easily solved by actually reading the local rules by said polyglots).

So the ECJ ruled that EU tax administrations can not limited access and communications to local advisers that meet certain local certification requirements. In the case presented to the ECJ, a Netherlands-based tax adviser (specialized in German tax law, but not certified under the German Law on Tax Consultants) appealed successfully against the limitations imposed by the German tax administration.

Another ceiling broken in the EU!

Practically speaking it is often still helpful to use local advisers – particularly where you may want to get details on local practices, or where you need good contacts with the authorities. And – sorry to say – the ruling does not apply to non-EU advisers!

Here is the ruling:

Download (PDF, 800KB)

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ECJ finally confirms: VAT is due if and when you get paid

If you have attended any of my webcasts or training seminars (I do this 6-8 times per year), you may remember that one of my “key” statements is to remember that VAT is due on everything that you get paid for.

VAT is an expenditure tax, not a tax on consumption. My professor indirect taxes back in the day (at Leiden University, if you’re Dutch you know who I mean!) always taught that if you buy a bottle of milk and drop it (i.e. not consume the milk), you won’t get a VAT refund.

This dogma has now finally been embraced by the European Court of Justice, in their Judgment in Joined Cases C-250/14 and C-289/14 Air France-KLM and Hop!-Brit Air v Ministère des Finances et des Comptes Publics.

The short and sweet of it is that if you sold and collected payment for a service or a good, you still have to account for VAT. Even if your buyer decides not to make use of the supply made.

In a previous ruling, the ECJ decided that compensation for damages is not taxable (Société Thermale d’Eugénie-les-Bains, C-277/05) (link to pdf). But that is not at all the case here – there are no damages, but simply no-shows in an airplane.

There are plenty of practical implications here. Think of hotels and restaurants that charge for no-shows, or telco companies that must charge VAT on unused balances.

Interestingly, the rules for unused gift cards are different – issuing gift cards is generally VAT free and VAT is due on the purchase of a good or service where the gift card is a “consideration”/payment.

The summary in the ECJ’s press release (link to pdf) states:

“The Court notes firstly that VAT is payable where, first, the sum paid by the customer to the airline company is directly linked with a service (in the present case, air transport) and, secondly, that service is performed.

However, the Court states that the consideration for the price of the ticket does not depend on the physical presence of the passenger at boarding, but that it consists of the passenger’s right to benefit from the performance of the transport service, regardless whether the passenger exercises that right. In other words, for VAT to be payable, it is sufficient that the airline company enables the passenger to benefit from the transport service. In that regard, the Court states that VAT becomes chargeable on receipt of payment of the ticket price.”

The entire ruling is here. Actually, I would recommend using this in VAT training and academic indirect tax classes. The ruling is a well-researched read with clear reasoning and step-by-step replies to the questions raised by the referring lower court.

Download (PDF, 842KB)

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KPMG’s survey of global trade and customs

Customs and global trade structuring continues to play an important role in supply chain management – KPMG and Thomson Reuters have published a round-up of the current challenges and how customs managers respond:

“The survey examines operational practices in global trade. Survey respondents also indicated their top challenges, identified key trends and goals for the profession, and described how the right global trade management system plays a role in an increasingly complex global trade landscape.”

Download (PDF, 10.44MB)

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