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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On my way to Avalara’s conference

All done with prepping my 3 VAT sessions in two days – I am on my way to New Orleans for “CRUSH” – Avalara’s first tax conference.

I am looking forward to meeting many new and surely a bunch of old friends! Back in NYC late Thursday.

Please drop me an email (mark@us-vat.com) if you want to receive a pdf copy of the slides.

Cafe Du Monde, New Orleans, 2014

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Reminder: a free, in-depth EU VAT course

Just to post a quick PSA that the European Commission has a free online EU VAT course on their website. This course provides you with the fundamentals of the EU VAT Directive.

It covers the typical “VAT 101” type topics that you will see and hear in my one-hour VAT training sessions, but then in more detail, and with more legal references and case law. There are 12 modules of 20-50 mins each.

Yes, it is entirely EU-centric, but that is not a bad thing as this course will give you a head start on studying other VAT systems, as the basic rules are pretty much the same across the globe.

http://ec.europa.eu/taxation_customs/common/elearning/vat/index_en.htm

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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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E-invoicing seminar

As most of you know, VAT rules around electronic invoicing have been slow to come to fruition, particularly in the EU. Interestingly, the authorities in most countries in Latin America (Brazil!), and also in Asia (China, Korea, Taiwan) have successfully developed electronic invoicing and government e-invoice pre-approvals as an audit tool.

From a sales tax point of view, the U.S. have been rather uninterested in e-invoicing, because the role of the invoice in sales tax is less pronounced than in VAT/GST.

The seminar below is focusing on e-invoicing in Latin America. I’m not speaking, nor attending, but judging from the agenda it must be an interesting one.

Hat-tip to Bart van Osch.

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