International - Indirect tax bytes

  • Australia: The government has released exposure draft legislation that will grant concessional tax treatment for certain primary producers that generate revenue from the sale of Australian carbon credit units.
  • Bahamas: The condo-hotel tax, which became effective on 31 January 2023, is levied on units that are part of a “condo-hotel” or other property that is rented in a hotel rental pool. A condo-hotel is a condominium that operates like a hotel, i.e., a property with several individuals owning each unit and sharing amenities. The condo-hotel tax is levied at a rate of 75% of the tax rate applicable to residential property under the Real Property Tax Act (currently 6.25%) on the assessed value of each property that forms a part of the condo-hotel or hotel rental pool, up to a maximum of BSD 150,000 per unit. However, during the first year of the tax, unit owners and administrators will only have to pay 50% of this charge. The condo-hotel tax must be paid for a hotel to renew its license.
  • Belgium: A bill passed on 23 March 2023 implements into domestic law the EU directive that contains new reporting obligations for payment service providers (PSPs) where cross-border payments relating to e-commerce transactions originate from EU member states. The king still has to give his assent to the legislation.
  • Bolivia: The deadline for certain taxpayers to begin issuing electronic invoices for VAT purposes has been extended from 1 April to 1 June 2023. 
  • Botswana: The temporary reduction in the standard VAT rate from 14% to 12% ended on 31 March 2023. As from 1 April, VAT-registered persons must charge VAT at the 14% rate (for prior coverage, see the item in the Bytes column in the October 2022 issue of Indirect Tax News).
  • Cyprus: A new electronic portal opened on 27 March that must be used for the submission of VAT declarations and payments and to communicate with the tax authorities. The portal eventually will be used for all taxes, both direct and indirect.
  • European Union: The EU VAT Committee published a working paper on 21 March 2023 that addresses the VAT consequences of non-fungible tokens (NFTs) and relevant transactions. The paper looks at, inter alia, NFT minting, NFT trading and NFTs earned for free. The issues raised in the paper are expected to generate discussions that ultimately will lead to the committee adopting a common position on the VAT consequences of NFTs. 
  • Germany: The upper house of parliament on 31 March 2023 approved a bill that implements parts of the EU directive on single-use plastics. The bill still must be published in the official gazette before it becomes effective.
  • Greece: The application of the 0% VAT rate on the import and supply of COVID-19 vaccines is extended to apply during calendar year 2023. Further, the application of the reduced 13% VAT rate and the super-reduced rate of 6% have been extended for an additional six months, from 30 June through 31 December 2023. The 13% rate applies to supplies, such as transportation, catering services, cinema tickets, coffee, tourism and the import of certain art. The 6% rate applies to specific medical items.
  • Hong Kong: The Inland Revenue Department released an updated Interpretation and Practice note (Stamp Office Interpretation and Practice Note (SOIPN) No. 2) on 23 March, which expands the scope of stamp duty relief to more stock borrowing and lending agreements provided certain requirements are met.
  • Iceland: A public consultation was held 6-13 March 2023 on a draft bill that would strengthen the power of the Directorate of the Iceland Revenue and Customs, the agency responsible for tax control and investigations.
  • Indonesia: On 4 April 2023, the government announced VAT incentives for the sale of four-wheeled battery-powered electric vehicles (EVs) and buses. The VAT rate on four-wheel battery-powered EVs and buses that have at least 40% locally manufactured components is 1% and a 6% rate applies to battery-powered electric buses that have 20% to 40% locally manufactured components. The incentives apply from April through December 2023 and aim to encourage the purchase of EVs and mitigate the impact of fossil fuel energy on the environment.
  • Ireland: A press release issued by the Ministry of Finance on 5 April 2023 announced that the VAT rate on the supply and installation of solar panels for private dwellings is drop from 23% to 0% on 1 May. This is a permanent rate reduction.
    In an brief issued on 20 January 2023, the tax authorities confirmed that a 0% VAT applies to the supply of COVID-19 testing kits that meet all requirements under the relevant EU medical device directives. The 0% rate applies retroactively as from 1 January 2023.
  • Isle of Man: In a press release issued on 23 March, the government announced an increase in the interest rates for the late payment and repayment of VAT and other indirect taxes. Late payment interest rate went up from 5% to 6.75%, and repayment interest rate from 3% to 3.25%. The increases apply as from 13 April 2023.
  • Italy: The tax authorities published an English-language version of the annual VAT return and related instructions on their website. The VAT return for fiscal year 2022 must be filed electronically by 2 May 2023.
    A decision published in the EU official journal authorizes Italy to increase the VAT-exempt threshold from EUR 65,000 to EUR 85,000 for taxable persons whose annual turnover does not exceed EUR 85,000. The increased threshold applies for a two-year period from 1 January 2023 through 31 December 2024.
  • Japan-U.S.: On 28 March, the U.S. and Japan signed a critical minerals agreement that builds on the 2019 trade agreement and aims to strengthen and diversify critical minerals supply chains and promote the adoption of EV battery technologies. In addition to confirming the parties’ commitments to facilitate trade, promote fair competition, etc., the agreement includes new commitments and areas for joint cooperation regarding EV battery critical minerals supply chains. The agreement is effective immediately.
  • Lithuania: The government proposed an increase in the VAT registration threshold from the EUR 45,000 to EUR 65,000 as from 1 January 2024 to help address inflation and price increases in the country.
  • Malaysia: The re-tabled 2023 budget presented on 24 February 2023 includes a proposal for a luxury tax on certain goods in 2023 (for prior coverage of the original budget released in October 2022, see the article in the November 2022 issue of Corporate Tax News). On 10 March 2023, the Customs Department announced that the imposition of sales tax on low-value goods will be deferred until further notice.
  • Montenegro: A new reduced 7% VAT rate applies to the supply of solar panels.
  • Myanmar: Battery-powered electric vehicles are exempt from commercial tax, a turnover tax imposed on goods and services at a standard rate of 5%.
  • Nigeria: The telecommunications sector is exempt from the 5% excise duty (for prior coverage, see the Bytes column in the October 2022 issue of Indirect Tax News). The government’s decision to grant the exemption appears to have been based on the fact that the telecoms sector already is subject various categories of taxes.
  • OECD: The VAT Digital Toolkit for Africa published on 15 February 2023 aims to help tax authorities on the continent with the design, implementation and operation of effective VAT measures for e-commerce and to ensure a level playing field between domestic bricks and mortar businesses and foreign online suppliers of goods and services.
  • Pakistan: The Finance (Supplementary) Act 2023 enacted on 23 February 2023 includes an increase in the general sales tax rate from 17% to 18%.
  • Poland: The VAT reverse charge will apply temporarily to the supply of gas, electricity and the transfer of greenhouse gas emission allowances traded on a commodity exchange. The result of this measure is that a recipient of these supplies will have to account for VAT where the supplies are made on a commodity exchange or regulated market or organized trading platform. The reverse charge will apply during the period 1 April 2023 through 28 February 2025.
  • Puerto Rico: On 22 February 2023, the Department of Economic Development and Commerce issued a circular letter announcing the creation of a regulatory framework for blockchain technology business activities. The letter includes definitions of various relevant terms and clarifies which activities are eligible for tax exemption decrees under Puerto Rico’s Incentive Code. 
  • Saudi Arabia: Taxpayers with annual taxable turnover exceeding SAR 250 million must comply with the electronic invoicing requirements under “Phase 2” by 1 October 2023.  
  • Serbia: As from 1 January 2023, foreign persons trading in goods that are in a customs warehouse no longer have to register for VAT purposes or appoint a tax representative in Serbia.
  • Suriname: On 1 March 2023, the tax authorities released instructions on how to submit a request to set up a VAT group (i.e., a fiscal unity). Taxpayers that wish to set up a group must submit a request electronically that includes the following information: (i) overview of the entities to be included in the group, along with their tax IDs and details of their business activities; (ii) evidence that entities are connected financially, organizationally and economically; (iii) identification and email address of the entity that will act on behalf of the group; and (iv) bank account of the group.
  • Sweden: An e-service portal is open for the registration of platform operators for DAC 7 purposes. DAC 7 requires platform operators to collect data about the sellers on their platform and the remuneration they earn and report this information to the tax authorities annually. Platform operators must register by 30 June 2023 and if they have “reportable sellers,” the operator must review the sellers’ data by 31 December 2023. The first reporting will take place by 31 January 2024 for income year 2023.
  • Switzerland: On 1 January 2024, the standard VAT rate will increase from 7.7% to 8.1% and the reduced VAT rate will increase from 2.5% to 2.6%. 
  • Turkey: The VAT rate on the supply of prefabs and containers is temporarily reduced from 18% to 1% to facilitate the construction of temporary shelters in areas affected by the recent earthquakes. The reduced rate applies from 15 February 2023 to 31 December 2023 and the conditions to qualify for the reduced rate have been lifted through 31 December 2023.
  • Ukraine: The tax authorities clarified on 23 March 2023 that where an entity transitions from the simplified VAT regime to the standard regime and its total VAT-able supplies in the previous 12 calendar months exceeds UAH 1 million, the entity must apply to register as a VAT payer by the 10th day of the first calendar month in which the move to the standard regime was made. Taxpayers can also elect to operate under the standard regime even if they do not meet the UAH 1 million threshold.
  • United Kingdom: On 30 March, the government launched a consultation on potential policy measures to mitigate the risk of future carbon leakage. Options under consideration include a carbon border adjustment mechanism (CBAM), mandatory product standards (MPS) and other measures to help grow the market for low carbon products, as well as emissions reporting. The consultation period runs through 22 June 2023.
  • United States: On 28 March, the U.S. Senate Finance Committee questioned five top suppliers to eight major automakers in the U.S. about potential forced labour in the supply chain linked to the Xinjiang Uygur Autonomous Region (XUAR) in China. The probe was originally launched in December 2022 when the Committee announced it was looking into allegations of the use of forced labour against the eight automakers in violation of U.S. federal trade and customs law. The Uyghur Forced Labour Prevention Act (UFLPA), which became effective in June 2022, prohibits the importation of goods tainted by forced labour, creates a rebuttable presumption that goods from the Xinjiang region have been made with forced labour and requires importers to demonstrate due diligence, effective supply chain tracing and supply chain management measures to ensure they do not import any goods that fall within the scope of the UFLPA, in particular, goods from the XUAR (for prior coverage, see the article in the July 2022 issue of Indirect Tax News).