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Tax administrations continue to grapple with the challenges created by highly digitalised business models and are exploring different approaches to the tax treatment of the digital economy. One of our lead articles looks at the new “deemed supplier” rule for platform operators that will apply in Switzerland starting in 2025 and that will impose new VAT compliance and reporting obligations on platforms.
Peru and the Philippines are introducing GST/VAT, respectively on digital transactions involving nonresident digital service providers. The rules in both countries will impact streaming activities, cloud storage, social media access, online publications, etc. and will result in tax compliance obligations for nonresident providers.
Reporting obligations continue to be on the rise, with Australia requiring businesses to make new climate-related financial disclosures and Norway requiring digital customs registration and reporting, and new guidance released on the application of CBAM in the EU that addresses challenges faced by importers in collecting data to fulfil their reporting obligations.
Other indirect tax developments around the world include:
- A substantial reduction in the tax rate on the purchase of foreign currency in Argentina for freight and other transportation services rendered by nonresidents related to the import and export of goods, or their acquisition.
- New tariffs in Canada on Chinese-made EVs and steel and aluminium products and new tariffs to be imposed on Chinese battery electric vehicles by the EU.
- European Union: On 3 October 2024, the European Commission formally launched an anti-subsidy investigation into the imports of battery electric vehicles (BEV) from China. The investigation will examine whether BEV value chains in China benefit from illegal subsidisation and whether that causes or threatens to cause economic injury to EU BEV producers. If this is determined to be the case, the likely consequences and impact of measures on importers, users and consumers of BEVs in the EU will be examined. The Commission will establish whether it is in the EU's interest to remedy the effects of the unfair trade practices found by imposing anti-subsidy duties on imports of BEV imports. The tariffs would be up to 35.3% in addition to the existing 10% duty.
- As from 1 October 2024, the EU General Court can issue preliminary rulings in cases involving the EU VAT system as a result of an expansion of the court’s jurisdiction (announced in August). The press release issued by the Court of Justice of the European Union (CJEU) states that preliminary ruling requests will continue to be submitted to the CJEU, which will conduct a preliminary analysis of the case; requests that are exclusively within one or more specific areas will be transferred to the General Court. In addition to VAT cases, the General Court will make preliminary rulings in cases involving the EU customs code, tariff classification of goods, excise duties, compensation and other assistance for transportation passengers in designated cases, and the greenhouse gas emissions allowance trading system.
Discussion on VAT in the Digital Age or ViDA has been postponed to November (for prior coverage, see the article in the July 2024 issue of Indirect Tax News). ViDA will introduce e-invoicing, single VAT registration and new tax rules for the EU platform economy. The EU member states met on 26 September 2024 where Estonia—the only member state that has not agreed to the plan—presented amendments to the bill. Estonia’s objections to the platform economy measures stem from its perception that ViDA would burden Estonian SMEs with additional tax.
On 25 September, the EU formally requested consultations with China at the WTO (the first step in the WTO’s dispute settlement system) concerning China’s initiation of an anti-subsidy investigation on certain dairy products imported from the EU. - An input VAT deduction in Italy for a special purpose vehicle involved in a merger leveraged buy-out transaction.
- Changes to the criteria for the temporary importation of “sensitive goods” into Mexico and restrictions on such imports, which have given rise to challenges for IMMEX companies in the country.
- A VAT exemption for crypto transactions in the UAE.