BDO Indirect Tax News | Issue 1/2022 - January 2022

Welcome to the January 2022 issue of BDO’s Indirect Tax News. We start off the year with a robust                    line-up of developments and insights from around the globe.  

The two feature articles spotlight the EU: one article looks at a tumultuous period in EU U.S. trading relations and the way forward and the second feature examines the agreement in the          EU to update and modernize the reduced VAT rates rules.  

Shifting the focus to Asia, we provide an update on the Authorised Economic Operator scheme in India the mandatory tax credit system that will apply in Japan for consumption tax purposes as from               October 2023 and new rules that will apply to private consumers in Singapore as from 2023 that will       require such consumers to pay GST on imported goods valued at SGD 400 or below.  

Courts have been active, with the CJEU confirming in a Hungarian case that VAT is levied only on           consideration actually received. India’s Supreme Court has issued a decision that prevents a taxpayer      from requesting a sizeable GST refund despite the fact that the taxpayer’s defence to incorrect filing was         due to glitches in the Indian GST portal.  

Changes are made to the VAT rates in the Bahamas, Bahrain, Indonesia and Laos, Ecuador’s president    has been granted authority to reduce the VAT rate for persons providing specific tourism services,  guidance is provided on the VAT treatment of mobile phones and airtime packages in the UAE and            Sri Lanka’s tax authorities have clarified the targeted VAT exemptions for information technology                and certain services. The effective date of Poland’s new VAT grouping rules has been postponed to               1 July 2022. 

In other news, Armenia, Cambodia and Ukraine have joined the growing list of countries that are            extending their VAT regimes to apply to nonresident suppliers of digital services, and the Nigerian            tax authorities have clarified the application of such rules in Nigeria.

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• INTERNATIONAL:
  • The fall and partial rise of US-EU trading relations
  • Indirect tax bytes
• THE EUROPEAN UNION:
  • Reduced VAT rate rules updated
  • CJEU rules Hungary must allow pharmaceutical company to deduct VAT on sales
  • Practical impact of the new definition of “exporter” for customs purposes
• ARGENTINA: Federal online gambling tax levied as indirect tax on betting
• ARMENIA: Nonresident providers of electronic services subject to VAT
• AUSTRIA: Tour Operators Margin Scheme extended to B2B supplies
• ECUADOR: President granted authority to reduce the VAT rate for the tourism sector
• INDIA:
  • Supreme Court bars taxpayer from GST refund claim
  • AEO program enhances supply chain security, facilitates trade
• INDONESIA: VAT rate increase and other changes to VAT rules
• ITALY: Tax authorities issue ruling on right to deduct VAT due on imports
• JAPAN: Update on new JCT invoicing system and commencement of registration procedure
• THE NETHERLANDS:
  • VAT on restaurant and catering expenses may be deduced when costs are passed on
  • VAT exemption for management of collective investment funds expanded
• NIGERIA: Guidance issued on simplified VAT compliance regime for nonresident suppliers
• SINGAPORE: GST to be levied on imported low-value goods
• SPAIN:
  • Spain approves legislation on mandatory e-invoicing requirements
  • GST to be levied on imported low-value goods
• SRI LANKA: VAT concessions granted for IT and enabled services
• UNITED ARAB EMIRATES: FTA issues guidance on input tax relating to mobile phones

Content Adapted from BDO Global.