Modernising VAT for cross border e-Commerce

The European Commission released legislative proposals to remove VAT obstacles for e-commerce to realize fair competition between traditional business and e-commerce.

The Commission has proposed practical new measures to support the digital economy when it comes to VAT compliance, which can currently place heavy burdens on small companies operating online.

The new rules should help to accelerate growth for online businesses, in particular startups and SMEs.

Proposals include:

  • New rules allowing companies that sell goods online to take care of all their VAT obligations in the EU through a digital online portal (‘One Stop Shop’), hosted by their own tax administration and in their own language. These rules already exist for online sellers of electronic services (‘e-services’);
  • To support startups and micro-businesses, the introduction of a yearly VAT threshold of €10 000 under which cross-border sales for online companies are treated as domestic sales, with VAT paid to their own tax administration. This goes hand in hand with other initiatives such as same invoicing and record keeping rules. Our aim is to make trading in the single market as similar as possible to trading at home for these companies;
  • The removal of the current exemption from VAT for imports of small consignments from outside the EU, which leads to unfair competition and distortion for EU companies;
  • A change to existing VAT rules to enable Member States to apply the same VAT rate to e-publications like e-books and online newspapers, as they apply to their printed equivalents.

These new rules will have a major effect for companies selling goods and services online that will now be able to benefit from fairer rules, lower compliance costs and reduced administrative burdens.

Member States and citizens will benefit from additional VAT revenues of €7 billion annually and a more competitive market in the EU.

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Accenture: Belastingdienst ‘Innovator of the Year’

Chief analytics officer Cyprian Smits van de Belastingdienst is door Accenture uitgeroepen tot ‘Innovator of the Year’. De uitvoeringsorganisatie krijgt de prijs voor de ontwikkeling van tools die het makkelijker maken om in contact te staan met gebruikers.

Source: Corporate nieuws details – TaxLive

UAE implementing VAT in 2018

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The United Arab Emirates (UAE) has proposed implementing Value Added Tax from 1 January 2018. A new tax office, the Federal Tax Authority, has been established by Federal Law 13 of 24 October 2016. This body will be responsible for the role out of VAT, and local laws on other taxes, too. It will manage the VAT registration and returns processes. Aside from launching the new consumption tax, the new Authority will co-ordinate VAT harmonization amongst the other Gulf states in the GCC single market. Source: UAE VAT 2018

According to surveys not many businesses have an adequate accounting systems to deal with VAT. Besides that lots of businesses lack the VAT knowledge of how a VAT works. Investments and training are needed to be ready in time.

To get VAT ready the following actions should be considered.

  1. Assess the business impacts
  2. Amend IT systems and business processes to the new situation forecasted and
  3. Review existing contracts and set rules for new contracts

How to get VAT ready in time

Norway introduces SAF-T to improve tax inspections

Norway is introducing SAF-T reporting for corporate entities, either resident or with physical presence in Norway (VAT registered businesses). From 1st January 2017 onwards it is required to provide SAFT-NO files in XML format on request of the Norwegian Tax authorities.

Tax authorities, due to technological innovations, have become increasingly better in executing their tax audit. The probability that the Tax Authorities will issue additional assessments and penalties in the near future because errors in indirect tax are detected, increases by the day. The SAF-T standard, originally created by the OECD, is intended to give tax authorities easy access to the relevant data in an easily readable format.

This leads to much more efficient and effective tax inspections.

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A scalable SAP solution for countries implementing SAF-T

The SAP add-on is extendable to countries that uses the OECD framework as the basis for SAF-T reports. Note that countries might have their own specific local requirements but in case the basic required data are covered in the OECD framework it could be managed with country specific variants.

You can compare it with the EU VAT requirements: EU Directive as framework with some country specific rules based on the options in the EU Directive.

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Integrated SAP add-on solution for SAF-T

Besides recently Poland, SAF-T is introduced now also for Lithuania and Norway. A fully integrated solution in SAP without an external interface or use of external software is available for Lithuania, Poland and Norway. Other countries will follow.

This integrated SAP solution is developed together with a certified Global SAP Application Partner.

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SAP add-on for SAF-T Poland

In Europe SAF-T is now in force in Austria, France, Lithuania, Luxembourg and Poland. Germany, UK, Ireland, Norway and the Czech Republic are most likely next to introduce SAF-T. Lithuania is expanding its SAF-T.

Starting October 1, 2016 all VAT-registered taxable persons, – including foreign companies registered for VAT – will be required to submit a SAF-T file in XML format to the LT Tax authorities on a monthly basis.


SAF-T SAP solution: fully integrated in SAP


We now offer a SAP add-on solution for SAF-T Poland (ABAP) at a fixed all inclusive fee. It is fully integrated in SAP without an external interface or use of external software. All inclusive means implementation, training and 1 year of free support and maintenance for bug-fixes & legal updates.

Our IT solution can be reused for other countries.


SAF-T Poland


Besides the monthly SAF-T VAT file in Poland, companies have to be able to meet the SAF-T obligation ‘on request’ containing different legal requirements. This submission applies in case of a preliminary tax inquiry, a tax audit and tax proceedings where the SAF-T file should be provided to the PL tax authorities in a short timeframe.  To avoid disputes and or penalties it is therefore important that a company is ready.


To establish synergies we have setup a joint venture initiative with a global development partner of SAP and leading software company in the area of e-invoice, e-bookkeeping, e-archive, e-ticket and such SAP add-ons in Poland. This company provides SAP certified add-ons for legal compliance to a large number of global well-known companies.

  • Runs over SAP
  • User friendly with single user interface (SAP)
  • Easy to install by external SAP transport
  • Easy to maintain by upgrades via transport files
  • Has its own global SAP namespace so there is no effect on SAP standards and is not affected by SAP upgrades
  • Standard SAP authorizations used
  • Open source code as ABAP programming language
  • Vendor independent
  • One year free maintenance service including bug-fixes & upgrades according to legal compliance

Last Thursday – 25 August 2016 – was the deadline of the monthly VAT SAF-T PL submission.

Our generated SAF-T VAT file reconciles with the numbers of the Polish VAT return and have also been checked with the official tool of the Ministry of Finance.


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Norway might introduce SAF-T shortly

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Norway has now also proposed to introduce SAF-T reporting for VAT registered businesses with a go-live date of 1 January 2017.

Tax authorities, due to technological innovations, have become increasingly better in executing their tax audit. The probability that the Tax Authorities will issue additional assessments and penalties in the near future because errors in indirect tax are detected, increases by the day. The SAF-T standard, originally created by the OECD, is intended to give tax authorities easy access to the relevant data in an easily readable format. This leads to much more efficient and effective tax inspections.

  1. Mandatory e-filing
  2. Benchmark: SAP and SAF-T PL
  3. Innovation and tax authorities

The Indian Parliament passes GST Constitution Amendment Bill

India

The Indian Parliament has voted unanimously to introduce the Goods and Services Tax (GST). This is a significant development which will affect all businesses with interests in India or who trade with India.

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It is now time to take the necessary preparations as the go live date is ambitious. The article in the next hyperlink includes also a roadmap and points of attention in PowerPoint that might be useful: ‘Introducing a new VAT system‘.

Sale-and-lease back not rental but other service subject to VAT

The Supreme Tax Court considers a sale-and-lease-back transaction as a taxable other service rather than a lease or the tax-exempt grant of a loan if the chosen scenario is a reasonable non-tax driven choice of form used to enable the seller (lessee) to enjoy certain accounting and reporting benefits.

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