Brexit date: January 1, 2019

So it seems that the Brexit is inescapable – the new prime minister indicated as much, and the new International Trade Secretary is on it. The US, Canada and Australia will soon start negotiations for free-trade agreements, and all that is left is to whip Scotland into the UK fray. Without Scotland’s agreement, the new UK government will not send “The Letter” – the indication to the other EU member states that the UK is leaving the Union.

After receipt of The Letter, the UK must leave the European Union within two years. If the target date is now January 1, 2019, The Letter must be sent before December 31, 2016.

This leaves UK VAT registered businesses with more than two years of prep time – should be plenty, but now is a good time to start the conversation with your VAT consultants.

Richard Cornelisse summarized the main talking points here:

See here for more on Brexit:


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In Qatar on July 25

I will be on a stopover in Qatar, on my way to Singapore on July 25. Let me know if you want to discuss the upcoming introduction of VAT in the region over coffee!

KPMG provided an update on the VAT developments there, see below:

Download (PDF, 2.81MB)

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EU – Canada trade deal – UK next?

Commenters were falling over each other in the days after the Brexit vote, struggling to answer the question “Now what?”. For VAT, it all seems fairly clear cut for as far as we can see, at least for international traders.

One thing that will remain unclear for some time to come is whether the UK will not only leave the European Union, but also the European Economic Area (EEA), which is basically a free trade zone between all EU members and countries like Iceland and Norway. Turkey might be a member of the EEA soon.

The EEA is all about free movement of goods, services and people, and particularly the “people” part may be a challenge for the UK – think immigration and refugees. So it makes sense to consider a separate EU – UK free trade agreement.

Earlier this week the EU announced the signing of a “Comprehensive Economic and Trade Agreement” (“CETA”) with Canada. A couple of highlights of the agreement are:

  • almost no customs duties
  • recognition of each others goods testing / conformity certificates / rights to food and drink products
  • access to public tenders
  • protection of labor rights and the environment

Levying import VAT (or GST/PST) will remain unchanged between the two parties, which is fine – the system works great and, like the EU, Canada is working on a import GST deferment system.

This EU – Canadian agreement looks like an excellent blueprint for a potential EU – UK CETA – have a look here if you want to make sure that your company or your clients are prepared:

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VAT Expert Academy, October 4-6, Dusseldorf

Raymond Feen writes:

“A total of 13 workshops will be held from October 4 to October 6, 2016 in Dusseldorf, Germany. The aim of the academy is to bring together VAT experts from all over the world to discuss, in interactive and lively workshops, various issues that arise in the course of the day-to-day business activities of VAT experts.
The event is tailored to meet the needs of VAT managers, VAT consultants and officials dealing with VAT. Ideally participants should have in excess of four years VAT experience.
Please note that this event will be conducted in English and will have an international focus.”

The schedule and registration form is below.

I know that there are many VAT training sessions to choose from in Europe, both by Big 4 firms as well as by commercial providers. This VAT Expert Academy is brought to you by the most knowledgeable VAT practitioners – if you are in the market for an advanced VAT refresher, I would strongly suggest that you make your way to Germany in the first week of October.

Note however that the content of these sessions is for a VAT-mature audience only!

Download (PDF, 1.15MB)

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July 4, 1776: the first Brexit

It wasn’t really the Tea Tax that the Americans resented – taxes on tea had been around for many years, and the new tax collection was in fact lower than the preceding tea tax (1). But it was rather the way that the Brits imposed the tax – without any involvement of the citizens of the New World.

Because the legislative process for taxation did not consider the vote of the Americans, the movement “No Taxation Without Representation” was born. It sounds somewhat like one of the current British arguments to leave the EU – the significant contribution that the UK pays to the EU doesn’t translate in sufficient public influence in how the EU budget is agreed.

The Boston Tea Party from 1773 was a protest against the British authority over the colonies. The colonies did not have any representation in the British Parliament, even though the colonists were deemed to be British citizens. The protest was the start of the American Revolution, that after a year or two culminated in the Declaration of Independence – signed 240 years ago.

Are we now seeing the same thing mirrored in the Brexit? Is it now the British citizenship that protest against the political process in the European Union? Voices being unheard and petitions being overlooked? When I followed the Brexit discussions and the “Leave or Remain” debates it certainly sounded like there was significant frustration with the European political process, the elite and institutions.

After the Independence was declared in 1776, the New World flourished. But the global economy has changed since 1776, and it remains to be seen if the United Kingdom of 4 July 2016 has the financial strength and fortitude to be independent of the – soon – 27 Member States of the European Union.

Happy Independence Day to all!

(1) The new Tea Act lowered the tariff on imported British tea, to better compete against the smuggled, untaxed Dutch tea…

Granary Burying Ground, Boston, MA

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Online services – Russia widens VAT scope

Timur Feinstein over at Sovos reports on recent proposals in the Russian parliament to capture non-Russian providers of online services to Russian customers.

Timur writes:

“The bill considers the Russian Federation as the place of supply of electronically supplied services (“e-services”) when provided by foreign organizations to Russian purchasers. For supplies to individual taxpayers (“B2C”), the foreign providers would be responsible for collecting and remitting Russian VAT. They would have to register for VAT and file quarterly VAT declarations for such collections by the 25th of the month following the quarter end. For supplies to taxable persons (“B2B”), the purchaser would be responsible for remitting the tax.”

See here for more information:

VAT on E-Services: Change Likely in Russia

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Amazon now enforcing UK VAT compliance

UK media, including The Guardian, have been aggressively reporting on VAT leakage caused by non-UK traders on Amazon and eBay. Apparently, they sell goods from UK-based warehouses without accounting for UK VAT at the correct rate.

From what I understand, the issue is that the warehouses are bonded, and that the value of the purchased goods that are shipped to UK consumers is typically below the threshold for low-value imports. As a result, the imports are exempt from VAT.

I can’t fathom any other way to legally sell imported goods within the UK – if the value exceeds the threshold import VAT will be due. Of course, no doubt that fraudulent filings will happen – there is a reference to non-EU traders illegally under-declaring imports.

Now Amazon demands to see UK VAT numbers from their mainly Chinese traders – I would think that HMRC better recruit additional customs officers to police the import values. These customs officers will come handy with the upcoming Brexit anyway…

More here:

And an earlier story with more investigation:

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