U.S. post-election: Anti-VAT is on the table

There is a proposal on the Congressional table to levy a retaliatory tariff on U.S. imports from VAT/GST countries. The tariff is based on the illusion that the VAT zero-rate on exports is in effect a subsidy on domestic exporters. The rate of the proposed tariff is equal to the VAT/GST rate in the country of origin of the imported goods.

Bloomberg writes as a part of their report on tax reform:

“Though the blueprint was seen as a departure from previous tax proposals, some lobbyists are concerned that the border adjustability provision—to tax imports and exempt exports—that funds much of the lower tax rates in the plan isn’t likely to comply with World Trade Organization rules, which allow border adjustment provisions for value-added tax systems, but not for income tax regimes.”

More here: http://www.bna.com/tax-revamp-optimism-n57982082574/.

And obviously also see my earlier posts and comments on this proposal.

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Timeline for India GST

Alex Baulf from Grant Thornton shared a very useful image of the current timeline of the GST implementation process in India:

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Update on Trump and the anti-VAT proposals

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U.S. House: Bipartisan anti-VAT proposal

There is a proposal pending in the U.S. House of Representatives that calls for a fee on imports from countries that do not refund import VAT to U.S. companies. I wrote about this craziness earlier, and within just a couple of days, this post became the most popular post ever on The VAT Blog:

Trump and a Democrat want a retaliatory tariff against VAT

And then someone picked it up on Twitter:

The response of Mr. DiMicco is not very original. The argument that exporters in VAT countries get a “rebate” is persistent – I hear it all the time. See my post for analysis.

Luckily there were more voices of reason:

Tomorrow is November 8 – happy voting all!

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India GST update

Updates on India GST:

  1. The GST Council, together with the Central Government, has proposed a rate of 12% and 18% at the latest meeting of the GST Council.
  2. The Central government’s proposal is to entail a lower rate of 4% for precious metals and 6% at its highest, two base rates of 12% and 18% and a maximum rate of 26% including all cess for goods, while a tax of 12% to 18% will be levied across all services.
  3. These rates are to be finalized in the next GST Council Meeting.
  4. Though the Central Government is a few months ahead of schedule, the final implementation is expected take place on April 1, 2017.

See these two comprehensive articles:

The Road to the GST Bill: How close are we to implementation?

The GST Bill: What it means for you


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Brazil: States must return excess ICMS

Indirect taxes in Brazil are widely considered as difficult, confusing and costly. Bloomberg BNA now reports that overpaid ICMS on estimated profit margins must be refunded:

“Brazil’s supreme court [on] Oct. 24 ruled that states must return excess tax collected when companies prove their products sold for less than prices the state estimated in setting the VAT (ICMS).

The decision goes further than the court’s previous position that permitted reimbursements only when sales weren’t completed. The court stated that its ruling is binding and applies to the 1,300 lawsuits now before lower courts on this question.

Brazilian states set ICMS taxes for selected sectors on estimated profit margins at the final point of sale set by states rather than having the VAT charged on real prices at every stop along the product chain. The states charge companies VAT on these estimates at the point of manufacture before the final sale price is known leading to complaints that the state sales estimates are unrealistically high and lead to inflated taxes.

The ruling primarily affects sectors with long production and delivery chains such as the auto industry, pharmaceutical and beverage manufacturers, sectors dominated by multinational firms in Brazil. At present only two of Brazil’s 27 states permit the reimbursement of ICMS taxes paid in excess by companies.”

See the entire Bloomberg BNA article here: http://www.bna.com/brazil-supreme-court-n57982079209/

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Designing an indirect tax function: KPMG

KPMG published a brochure that describes the process of “Designing an indirect tax function that is fit for the future”.

They say:

“The components of the indirect tax operating model include three strategic components and three enabling components:

— Strategic components

1. Governance and risk

2. People and capabilities

3. Organizational model

— Enabling components

4. Process and responsibility

5. Data and information

6. Systems and technology”

KPMG’s process is, of course, based on Big Data and KPIs, and I have attached another KPMG publication that provides (a bit) more detail on their approach.

Download (PDF, 202KB)


Download (PDF, 135KB)



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