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In this edition we look at:
The EU payment services directive - which will introduce recordkeeping and reporting requirements to prevent VAT fraud starting on 1 January 2024—will require payment services providers to keep electronic records of data on cross-border payments and to share the records with the tax authorities throughout the EU, via a newly created central EU database. The Netherlands has released draft legislation to transpose the directive into its domestic law and the Slovak Republic has implemented the rules.
Norway has extended the scope of its VAT regime to apply to all “remotely deliverable services” from abroad to consumers in the Norwegian VAT area (rather than just remotely deliverable electronic services to consumers). In the Middle East, the Oman tax authorities are starting to review VAT returns and requiring some taxpayers to complete a “checklist” when filing returns and the UAE authorities have issued useful guidance on VAT, including how the statute of limitations will be applied.
What's new in Slovakia
Several changes to the Slovak VAT Act apply as from 1 January 2023, including the introduction of a reduced VAT rate for certain supplies, a requirement that customers correct deducted VAT if payment has not been made for the supply, new rules for determining when a VAT debt is irrecoverable and a VAT registration waiver for certain taxable persons. In addition, the EU payment service providers directive has been implemented into Slovak law; as from 1 January 2024, new recordkeeping and reporting requirements will apply to payment service providers with respect to cross-border payments, which will be shared among the tax authorities in the EU member states.
Reduction of VAT rate
To provide support to the tourism and catering sectors, a reduced VAT rate of 10% applies as from 1 January 2023 for (i) the transportation of persons via cable car and ski lifts; (ii) access to indoor and outdoor sports facilities; (iii) access to swimming pools; and (iv) restaurant and certain catering services.
Correction of deducted VAT on unpaid liabilities
A customer is now required to correct deducted VAT relating to purchased goods or services to the extent of any unpaid liability if the supplier has not been paid within 100 days of the due date. If the customer eventually pays all or part of the liability, it will be able to deduct the corresponding input VAT. Based on transitional provisions, this rule also applies to supplies of goods and services made before 1 January 2023 if 100 days have elapsed by that date.
Bad debt relief for suppliers
Changes have been made to the bad debt relief rules where VAT has not been paid on a supply and the claim is not recoverable. Specifically, the rule that a VAT debt will be deemed to be irrecoverable only if it has been outstanding for more than 12 months and the receivable is valued at up to EUR 300 is abolished. Instead, a debt is now considered irrecoverable if it is overdue for 150 days and the claim:
- Does not exceed EUR 1,000, including tax, and the supplier can demonstrate that it took steps to obtain payment; or
- Is for more than EUR 1,000, including tax, and the supplier has filed a lawsuit in a court other than an arbitration court or the payer proves that the claim is being enforced through execution proceedings.
A VAT debt will be considered irrecoverable if the 150-day period ends after 1 January 2023.
Waiver of VAT registration requirement
The VAT registration requirement will be waived where a taxable person only carries out exempt activities (e.g., insurance services, financial services or the supply and leasing of immovable property) where turnover from such activities exceeds EUR 49,790 in a 12-month period.
In this edition you will also find tax news from the following countries::
- Bahrain: Digital Stamps Scheme for cigarettes sold in local market
- Belgium: New rules apply to the direct attribution method for VAT deduction
- Canada: Does sales tax apply to online gaming?
- European Union:
- CJEU strictly interprets invoicing requirements for application of simplified triangular transaction rule
- Significant changes coming in the “VAT in the Digital Age” package, including real-time digital reporting
- India: Government engaging in multi-pronged drive to boost export industry
- Indonesia: VAT exemption for mining and drilling activities clarified
- International:
- Indirect tax bytes
- VAT/GST changes for 2023
- Netherlds: Legislative proposal released on new VAT recordkeeping and reporting obligations
- New Zealand: New reporting and GST liability proposed for the gig and sharing economy
- Norway: General VAT liability introduced on cross-border B2C supplies of non-electronic services
- Oman: Lessons learned from the first year of VAT
- Singapore: Carbon credits now not subject to GST
- Slovakia: Changes to VAT Act reduce administrative burdens and VAT rate on certain supplies
- Spain: Changes made to use and enjoyment rule, reverse charge and VAT recovery on bad debts
- United Arab Emirates: New decree-law clarifies and updates VAT rules
- United States: States wagering on sales tax revenue from online gaming and sportsbook providers