BDO Indirect Tax News Issue 3 - July 2023

The CBAM regulation on the EU Carbon Border Adjustment Mechanism contains detailed information on the reporting obligation of EU importers, as well as the methodology for allocating direct and indirect emissions released during the production of covered goods. As from October, importers will have to start collecting data on the embedded emissions of goods subject to complete the first report by the end of January 2024.

Recent developments of interest in the EU include:

• The tax authorities in Denmark can impose interest on corrections made to VAT returns where the corrections result in VAT liability. 

• Germany has joined the ranks of other countries by introducing a single use plastic tax that will apply as from 2024. The country is also discussing a proposal to introduce mandatory e-invoicing requirements for German-established companies making B2B supplies as from 1 January 2025. 

• Italy’s tax authorities have revised their position on the VAT treatment of the provision of services between two PEs of the same entity, where one PE is established in Italy and the other is in another EU member state, where it belongs to a VAT group. 

• The supreme court in the Netherlands has ruled that the customer’s identity must be known to apply the VAT reverse charge.

• Draft regulations in Spain will implement mandatory e-invoicing in B2B transactions and allow for the establishment of a network of private platforms or a public system to be used for the submission of e-invoices. In a welcome change, a recent law further narrows the instances in which the VAT use and enjoyment rule applies by removing the B2B supply of financial services from its scope. 

In the Asia-Pacific region, qualifying integrated circuit enterprises in China are able to enjoy an extra 15% input VAT credit for a five-year period. Relief measures have been proposed in Japan to mitigate the consumption tax burden on SMEs that currently are tax-exempt businesses for consumption tax purposes but that register under the new qualified invoicing system scheduled to become effective on 1 October 2023. Malaysia has re-introduced a voluntary disclosure regime to encourage businesses to disclose outstanding indirect tax liabilities during the period 6 June 2023 to 31 May 2024. 

Finally, Canada has enacted a forced labour law that will apply as from 1 January 2024, there has been an uptick in the in U.S. sales tax audit activity of remote sellers and marketplace facilitators in the years following the Wayfair decision and Aruba has deferred the introduction of a turnover tax on imports to 1 August 2023.

Learn about these developments and more in Indirect Tax News. Be sure to check out the Indirect Tax Bytes column!  

 

Are you a tax leader in your organisation? We invite you to share your views in BDO’s Global Tax Outlook 2023, our quick survey on how the business of tax is evolving. 

Content adapted from BDO Global.