OT: Global connections

Some of you know that the guy behind the VAT Blog is actually a photographer in real life, and I wanted to share this powerful narration – a “behind the scenes” – of this year’s World Press Photo.

The image is about global migration, the need to stay connected with family and friends and how technology plays a role. And to this extent there is no difference if you live in Djibouti or Lakeville, CT.

John Stanmeyer About A Photograph from thinkTank Photo on Vimeo.

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Cancelled – Join us at Avalara Horizons 2014!

Not now, maybe next year…

If you are a sales tax specialist (or even a VAT person!) and you are interested in the taxation of online sales, please join me at the Avalara conference from April 30 to May 2 in Seattle.

I will proudly share the stage with Paula Borhauer, Starbucks’ director of global indirect tax, and we will speak about the global aspects of online sales. Our session is titled: “Geo-Cashing: Taxation in a Global Cloud Economy”.

Interestingly, Paula is an avid geo-cacher, and I wrote my graduation thesis about the subject 20 years ago. So that’s going to be a fun session that I look forward to! I think that we are also doing an extended Q&A afterwards.

Not that the other presenters are any less interesting: have a look at the lineup here: http://www.salestaxhorizons.com/agenda.

If you are interested, please sign up here: http://www.salestaxhorizons.com/ – if you sign up before February 28 you get a $100 discount.

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How to scope any VAT project

Over the past couple of weeks I have had more than a few calls where I needed to help a partner or a client with getting their arms around a major VAT-driven project. Global projects often seem overwhelming, and it is difficult to find an efficient starting point. The focus for all of these projects was on mapping the supply chain with a goal to either do (or re-do) an implementation, or get a better understanding of the global VAT footprint.

Establishing the VAT liability of the operations of a global organization is a big deal. I am a firm believer in following the mantra of The Six Sacred VAT Questions to work towards a reliable result:

Who sold What to Whom, When, Where and for How Much?

Keep that in mind when you use this rather coarse, but hopefully useful one-pager.

Download (PDF, 110KB)

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OT: Speedskating vs. Football

This is a fun interview with the outspoken coach of the Dutch speed-skating team. Enjoy!

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Tax authorities suffer from budget cuts

A letter to the editor in this morning’s Dutch daily “De Telegraaf” pretty much sums up what tax authorities world-wide have been suffering from: lack of money.

An auditor with a 40-year track record at the Dutch revenue service says that the operations of midsize and larger companies have become so complex, that with the current budget a thorough tax audit is almost impossible. The politicians want a smaller revenue service, but the number of companies has only increased.

The auditor also mentions that  the current population of tax inspectors is simply not up to the task of ensuring that the correct amount of tax is collected.

From my perspective, these thoughts are spot on. Where I am involved with VAT audits, inspectors hardly take the time to get to understand how the company’s operations work, and are solely focused on “denying as much input tax credit as possible”, or “rejecting as many zero-rated exports as possible”. Sometimes it seems like indirect taxes are too “embedded” in the company’s complex global operations for a tax auditor to really understand. Direct taxes are a bit more removed from the supply chain and seem easier to review.

This structural complexity, but also the lack of audit risk, may be among the reasons why VAT is not very visible to a company’s CFO and even the tax department, even though an average MNC’s VAT risk is easily 25%-45% of its global sales.

Also, the much-heralded initiative of the Dutch revenue service to agree on a “tax covenant” with large companies does not seem to have taken off. This is an on-going agreement where the tax man agrees not to bother a company too much, provided that the company voluntarily discloses all potential tax issues.

Unfortunately I don’t have an English translation of the letter – Dutchies can refer to this link:

http://www.telegraaf.nl/watuzegt/22270056/___Belasting_innen_raakt_uit_zicht___.html

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OT: The conference call visualised

What would a conference call look like if all attendees would be in the same room: a cool idea (it’s an ad for leadercast.com).

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South Africa kicks off VAT on online sales

Last week the tax man in South Africa published draft legislation that taxes online sales to South-African residents. Although the rules look pretty straight-forward, there are lots of open ends. A couple of initial thoughts:

  • How do they want a U.S. online seller to register in South Africa? There is currently no mechanism to register, file returns and pay taxes for non-resident businesses.
  • This applies to sale to both South-African resident individuals as well as businesses. A reverse charge for the latter would be much simpler.
  • In the EU only “automated” online sales (f.e. downloads of software) are covered by the e-commerce VAT rules. Non-resident sellers of for example one-on-one teaching (say via Skype) are not required to account for VAT. The South African rules include this type of services, which can be challenging if an exemption applies for classroom teaching.

The rules are slated to take effect from April 1, 2014.

Have a look here for more info:

http://www.bdlive.co.za/business/2014/01/31/government-wants-to-levy-vat-on-foreign-e-commerce-firms

http://www.news24.com/Technology/News/SA-eyes-VAT-on-e-books-apps-games-20140131

The document is here:

Download (PDF, 217KB)

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