The Australian Parliament recently amended the GST Act of 1999, to add an additional category of drugs and medicine preparations, which are now included in the list of GST-free goods seen in section 38-50(6)(b) of the Australian GST Act. The new section, 38-50(6)(ba), states that a supply of a drug or medicinal preparation is GST-free, if that supply is authorized by the rules stated in sub-section 19(7A) of the Therapeutic Goods Act of 1989.
Sub-section 19(7A) of the Therapeutic Goods Act includes, drugs or medicine preparations made by “any health practitioner who is included in a specified class of health practitioners to supply: (a) specified therapeutic goods for use in the treatment of humans; or (b) a specified class of such goods”. Additional information, as well as the language of sub-section 19(7A) of the Therapeutic Goods Act can be seen here.
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Effective July 1, 2017, the Minister of Finance in Malaysia announced that four groups of supplies will now be exempt from GST. The supplies that no longer apply GST include:
More guidelines and information regarding the GST Relief plan, has been published by the Royal Malaysian Customs Department, here.
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The Mexican Tax Administration Service (SAT) has published additional AEOI material, including a calendar with relevant deadlines and specifications for CRS transmittals.
The AEOI Calendar indicates that the FATCA and CRS testing window will now end on July 14, 2017. At that time, the production period will begin – with reports being due to SAT by August 15, 2017. Previously, Mexico’s scheduled due date had been June 30^th^. As of now, this change will only be effective for this filing season.
Mexico has also published additional CRS specifications for the transmittal of reports via Mexico’s portal. Mexico utilizes the CRS schema produced by the OECD, and these specifications merely serve as clarifications and guidance for creating transmittals rather than an entirely new XML schema.
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Getting a VAT refund has become simpler for suppliers registered in Romania under the MOSS scheme. In the past, taxable persons established outside the EU who supplied electronic services in Romania were required to appoint a tax representative. But on July 13th, the Fiscal Administration (ANAF) released a press release announcing that in accordance with government decision 284/2017, the tax representative requirement would be removed for non-EU suppliers registered under the MOSS scheme.
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The Danish Customs and Tax Administration (SKAT) has announced a limitation on the VAT exemption for supplies of blood plasma. Previously, the SKAT had allowed for exemptions on all deliveries of the human blood plasma. Going forward this exemption will no longer apply to supplies of plasma to companies intending to use the plasma in the production of medical or pharmaceutical products. The exemption is now limited to deliveries used directly for health care or therapeutic purposes. This change in policy was made in reaction to the ruling in ECJ Case C-412/15.
The SKAT has also released a decision finding that the exemption for the teaching of language, music and other topics applies to teaching outside of traditional schooling so long as the teaching is of an academic nature and is not focused on profit making activities.
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Hungary has continued to release additional information about its upcoming invoice reporting requirements. Starting on July 1, 2018 VAT registered persons will be required to report B2B invoices of over 100,000 HUF to the government. The National Tax and Customs Authority (NAV) launched the KOBAK program at the beginning of July 2017. Registered persons can use the KOBAK system to submit test XML files in preparation for next year’s implementation of the new reporting requirements.
Taxpayers can register to use the system at a separate website. The NAV has also made the XSD schema for the XML files available at the same website. As was previously reported, the implementation of the invoice reporting requirements, along with a lowering of the invoice threshold for the domestic summary report, was originally scheduled to begin on July 1, 2017 but was delayed to 2018 by the passage of Act LXXVII of 2017.
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Earlier this month, bill number 34755, which would modify the treatment of vouchers under the Dutch VAT Act, was introduced to the Dutch Parliament. The proposed law would differentiate between single use vouchers, defined as vouchers where the place of supply and amount of VAT on the supply are known at the time of the voucher’s issuance, and other vouchers. The transfer of a single use voucher would be considered a taxable act, while the transfers of other vouchers would be VAT free, with VAT collected on the actual delivery of goods or operation of service based on the value of the voucher. The proposal is meant to bring the Dutch VAT Act into conformity with EU Council Directive 2016/1065.
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The Financial Administration of the Czech Republic recently published amended filing instructions for the “Kontrolní hlášení”, or the “Check Report” form, which is a required filing for all taxable persons under the Czech VAT Act. Among the changes to the instructions is, first, a new requirement for contract companies (partnership-structured entities) to now file by individual partner instead of as a company group, and second, the assignment by the Financial Administration of numerical codes under which supplies are reported on the Check Report.
For people working as a part of a partnership or contract company, the partners will now be required to file a control statement individually, rather than as a tax group under the company’s name. This change will be on a phased implementation schedule, with all partnership companies that are already engaged in contracted business activities to be compliant with the new system by January 1, 2019. However, any new company contracts that are made by individuals would require immediate application of these new filing requirements.
For the numerical code assignments for types of supplies, several new categories have been added to reflect the July 1, 2017 VAT Act Amendment changes. These additions can be seen on pages 10-11.
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The Italian Tax Authorities issued Resolution No. 87/E on July 5, 2017, confirming that a taxable person may amend a previously filed communication even after the 15th day following the day on which the deadline expires. The communication must include sales invoices issued and purchase invoices recorded in the VAT ledger during the period of reference. Invoices for composite supplies of goods and services must be recorded according to the criterion of “prevalence”, i.e. according to the supply with the higher value. Finally, the taxable person may benefit from favorable measures to reduce administrative penalties provided by article 13 of the Legislative Decree No. 471 of 18 December 1997.
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The Federal Ministry of Finance has released guidance related to a VAT exemption on storage fees for frozen reproductive material. When frozen gametes are stored for therapeutic purposes – such as contributing to a pregnancy as part of fertility treatment – the storage fee is properly VAT exempt. Absent a direct therapeutic purpose, however, storage fees for frozen gametes are taxable. This may arise when gametes are stored for precautionary reasons, or by third-party entrepreneurs in cryobanks.
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On July 12, 2017, the Tribunal Administratif de Paris struck down a bill of more than 1 billion euros assessed by the French government against Google for back taxes, including VAT. The Tribunal found in particular that Google did not have sufficient human and technical resources in France to subject the company to VAT; instead, the Tribunal held that Google was based in Ireland and merely carried out certain operations in France. The French government has stated that it will analyze the judgment with an eye towards a possible appeal.
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The Cayman Islands’ Department for International Tax Cooperation has recently announced a “final extension” for reporting under the FATCA and CRS regimes in a “AEOI News & Updates” release. Reporting under both systems will now be due August 31, 2017. Reporting entities must register with the Department by July 31, 2017 to ensure they meet the reporting deadline.
Reporting was originally scheduled to be due by May 31, 2017. Future reporting will likely be due on May 31 of each year.
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Bahrain has recently published the Competent Authority Arrangement between itself and the United States for the purposes of FATCA reporting. The agreement is required by the Inter-Governmental Agreement between the two states to facilitate FATCA reporting.
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France has updated its technical guidance, Transfert d’Informations to version 1.3. The new version contains some schema changes including the addition of the Address Type attribute that was previously not required, even though it is required under the OECD’s schema. Reporting French Financial Institutions, who have Reportable Accounts, should give close attention to the new guidance to ensure that their CRS returns will be accepted by the French government. In addition, please remember that France had previously delayed the CRS deadline to September 8.
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The United Kingdom has announced plans to eliminate its “use and enjoyment” provision for VAT on business-to-consumer (B2C) telecommunications services used outside of the European Union. Schedule 4A of the VAT Act of 1994 currently treats telecommunication services used outside of an EU member state as taking place where consumed, even if the service would otherwise be taxable in the UK. Absent this “use and enjoyment” rule, B2C telecommunications services will be sourced to the billing address of the customer. The UK currently sources telecommunication services used within the EU to the billing address of the customer; the proposed amendment to the VAT Act will apply the same treatment to such services used outside of the EU.
There are large implications for both private consumers and suppliers of telecommunication services. If a private consumer uses his or her mobile phone to make a call while visiting Canada, the roaming charges, which previously were not subjected to VAT, will now have VAT assessed on the call.
The new change will effect services made on or after November 1, 2017. The change will bring the United Kingdom into line with international standards and will reduce inconsistencies in VAT assessment for telecommunication services.
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The Governor of Puerto Rico has signed into law a bill (PC 1133) that changes the frequency of sales tax remittance. As reported earlier in this forum, the new rule requires most taxpayers to pay sales tax in the same month as it’s collected, in two monthly installments:
The legislation also provides that taxpayers will be considered compliant if they pay at least 80% of the sales tax due during the relevant period OR if they pay 70% of the sales tax paid during the same month of the previous year.
The legislation does not clarify how local tax will be remitted under these new rules.
Under the new law, the filing rules do not change. The standard monthly tax return (Form SC 2915) remains due on the 20^th^ of the month.
Technically, the law carries a July 1 effective date but we fully expect that the Puerto Rico Department of Revenue to issue guidance explaining a compliance timeline. When that happens, Sovos will report it here.
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Organizations operating in the Basque region of Spain will soon be required to comply with SII reporting requirements. As reported in this forum, effective July 1 most companies operating in Spain are now required to transmit information to the Spanish Tax Administration (AEAT) regarding purchase and sale transactions within a few days of invoicing. Today, these requirements do not apply in the Canary Islands, Ceuta, Melilla, Navarra and the Basque regions (which include Alava, Guipúzcoa and Vizcaya). With respect to Navarra and the Basque Regions, the reason the requirement does not apply is due to the special relationship these locations have with the federal government whereby VAT is collected and remitted under a parallel but separate system.
Over the last several days, the Basque Regions and Navarra have announced that they will implement the SII starting January 1, 2018, While the rules will be similar to standard Spanish SII, administration will handled through local authorities and not AEAT. We expect additional regulation and technical specifications to follow shortly.
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The Secretary of the Treasury for the Commonwealth of Puerto Rico announced that they plan on encouraging the local legislature to adopt significant tax reform measures, including a number of items that will impact sales tax (locally known as IVU). The details of the proposed reforms have not been released but the Secretary has indicated that one of the measures will involve a reduction of the sales tax rate applicable services provided between 2 businesses (B2B) from 4% to 2%. Other proposed changes include a possible reduction in the personal income tax rate. We expect to learn more about these proposals in the upcoming month.
The fate of the twice-monthly sales tax filing requirement reported earlier still remains uncertain.
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