Editor's Letter

Dear reader

At the end of December, with the holidays approaching, it is always a time to look back at the past year. 2020 has undoubtedly been a particularly difficult year in which everything is different. This will also be the case for most of us with the upcoming holidays. Nevertheless, I hope that most of you will be able to be with family, friends or others who are dear to you. Although the consequences of the COVID-19 pandemic will certainly be felt in the first half of 2021, there is light at the end of the tunnel with vaccinations taking place in some countries already in December and much countries will follow in January 2021. Although some countries are still implementing and running tax measures relating to the COVID-19 pandemic, others are putting an end to such measures. Entrepreneurs trading in Germany, for example, will have to take into account that the temporary reduction in VAT rates will end.

It seems that the pandemic and the associated lock-downs have accelerated digitalisation. More countries are introducing a form of e-invoicing or e-reporting. It is therefore not surprising that the European Commission organised a Fiscalis seminar on this subject in September 2020..

In this edition of BDO Indirect Tax News, you can read about such measures in countries such as Italy, India and Japan. Developments on rules on levying VAT/GST on digital supplies have not taken a halt either. Significant changes in the field of VAT and B2C e-commerce will take place in the UK on 1 January 2021 and in the EU on 1 July 2021. There are also developments in Canada and Mexico in this area and we have included articles about these developments in this edition. I also invite you to read and compare the articles from our German colleagues and Belgian colleagues on VAT deduction in the situation where a third party benefits from costs incurred. Case law of the Court of Justice of the EU offers possibilities to deduct VAT in such situations.

Last but not least the UK’s departure from the European Union will take final effect as of 1 January 2021 and, at the time of writing, it remains unclear if a free trade agreement with the European Union will be agreed. Nevertheless, with or without a deal, there will be a number of fundamental changes in processes required for businesses in the UK and in the European Union because of the requirement to have full customs entry and exit processes in place, and delays should be taken into account and preparations made to mitigate against the impacts.

To make matters more complex, as a result of the Northern Ireland protocol, it will be the case that Northern Ireland will have a dual status, of being both a member of the European Union ‘single market’ for goods whilst also being part of the United Kingdom customs union. With that said all that remains for me to do is wish you a Merry Christmas and a Happy New Year.

In this issue:

ARGENTINA: Fiscal consensus - Implementation of stamp tax on credit and purchase cards in the city of Buenos Aires
BELGIUM: Can input VAT incurred on services which have also benefited a third-party be deducted? (Vos Aannemingen BVBA – case C-405/19)
CANADA: Year-end GST/HST updates
CZECH REPUBLIC: Restrictions on the application of VAT on real estate rental from 1 January 2021
ETHIOPIA: Amendments to the Value Added Tax and Excise Tax
THE EUROPEAN UNION:
- European Commission publishes Explanatory Notes on the new VAT e-commerce rules
- If the intended activity does not take place, what do you do with the deducted VAT?
GERMANY:
- European Court of Justice strengthens the right for entrepreneurs to deduct input tax and thus the neutrality of VAT
- The temporary reduction of the German VAT rates will end soon
GUATEMALA: New special electronic regime for refunding tax credits to exporters
INDIA:
- Automation - The new normal
- Import initiative - The Manufacture and Other Operations in Warehouse Regulation
IRELAND: Temporary reintroduction of the second reduced VAT rate for the Tourism and Hospitality sector
ITALY: News on e-invoicing regime and VAT obligations
JAPAN: Introduction of new Japanese Consumption Tax system - The Japanese tax-qualified invoicing method
KAZAKHSTAN: VAT in Kazakhstan through the prism of time
MALAYSIA: Budget 2021
MEXICO: New additions to the VAT Law for digital service providers
OMAN: VAT introduced in Oman
PANAMA: Panamanian VAT credit application procedure
SINGAPORE: Goods and Services Tax (GST) on transfer pricing adjustments
SLOVAK REPUBLIC: Outstanding receivables
SOUTH AFRICA: Taxation Law Amendment Bill and other changes in Value Added Tax for 2020
SPAIN:
- Subsidiary qualified as a permanent establishment of its parent company for VAT purposes
- Digital Service Tax
- Modifications VAT Spain
SRI LANKA: VAT simplification and rationalisation
UNITED KINGDOM: Cost Sharing Groups - Territorial question unanswered (again)
UNITED STATES: Sales and Use Tax and COVID-19 - Recognise the risks and take advantage of the opportunities
ZIMBABWE: Restrictions on the importation of vehicles including buses