In this, our regular high-level overview of changes around the world, we focus on some of the changes to value-added tax (VAT), goods and services tax (GST) and sales tax that have taken place from mid-2015 onward (both agreed upon and proposed).
Further details of these changes are set out in our report, Indirect Tax in 2016, in recent EY Global Tax Alerts, in previous editions of Indirect Tax Briefing and in the forthcoming Worldwide VAT/GST and Sales Tax Guide 2016.
The following maps indicate the number and breadth of indirect tax changes that are taking place in the world, especially in connection with VAT/GST.
The extent of these changes presents a challenge for tax and finance executives responsible for managing indirect taxes for global businesses. They must first be aware of them and must then incorporate them into systems and processes to promote compliance.
- Standard VAT/GST rates seem to have stabilized compared to recent years, but many countries have increased the reduced rates, and others are broadening the tax base — such as Austria, Belgium, China, Estonia, Greece and Norway.
- Consumption taxes continue to spread, with a number of places announcing plans to introduce VAT or GST systems or to extend the scope of their VAT systems to new activities — examples include Costa Rica, the Gulf Cooperation Council, Puerto Rico, India, and Sao Tome and Principe.
- At the same time, many countries have introduced or plan to introduce new rules for taxing the digital economy — including Australia, Canada, Japan, New Zealand, Russia, South Korea, Tanzania, Thailand and Turkey.
- Compliance requirements are also evolving:
- The mandatory use of e-invoices and e-filing is spreading, e.g., Argentina, Belarus, Kenya and Indonesia.
- Additional reporting systems and controls have been introduced in the Czech Republic, Denmark, France and Spain.
- The application of the reverse charge is extended in countries such as Latvia, the Slovak Republic and the United Kingdom.
- Kosovo, Switzerland and Tanzania have introduced additional registration requirements for overseas companies.
VAT/GST rate changes
1 January 2015: additional reduced rate of 13% was introduced
1 September 2015: electricity for household use now subject to VAT at 21% (previously 6%)
Plans to increase Newfoundland and Labrador’s harmonized sales tax (HST) rate have been canceled
1 July 2016: HST rate in New Brunswick will increase to 15% (from 13%)
1 January 2016: standard rate decreased to 15% (from 15.5%)
January 2016: VAT applies to sale of immovable property
January 2016: plans to introduce a unified VAT rate of 17.5% have been abolished
1 January 2017: reduced rate for accommodation services to be increased to 14% (from 9%)
2016: proposed reduction of rate to 9% (from 15%)
1 January 2016: VAT on intimate feminine hygiene products reduced to 5.5% (previously 20%)
20 July 2015: goods subject to the reduced rate were limited
1 October 2015: favorable VAT rates applicable in certain Greek islands were abolished
1 January 2016: passenger transportation for recreational purposes and services provided by travel agents and travel organizers are taxed at 11% (previously exempt)
1 August 2015: sales tax applied to domestic providers of mobile phone and internet plans
Reduced rate that generally applies to tourism and hospitality services has been retained
1 October 2015: standard rate reduced to 17% (from 18%)
1 January 2016: 4% reduced rate applies to all e-publishing materials
1 January 2017: standard rate will increase to 24% (from 22%); reduced rate will increase to 13% (from 10%)
1 January 2018: standard rate will increase to 25%
1 April 2017: consumption tax is planned to increase to 10% (from 8%); postponed from 1 October 2015; 8% rate will be retained for certain foods
October 2016: standard rate (currently 16%) may be reinstated on all oil products (currently exempt)
1 September 2015: standard rate increased to 18% (from 16%)
1 September 2015: introduction of reduced rate of 8% for basic foodstuffs, utilities and medical and pharmaceutical products
1 August 2015: reduced rate (8%) applies to imports and intra-European Union acquisitions of collector’s items and antiques
1 January 2016: reduced rate increases to 10% (from 8%)
1 January 2016: zero rate applies to e-newspapers and e-journals (previously 25%)
2016: temporarily increased rates of 23% and 8% continue to apply until 31 December 2016
1 January 2016: standard rate reduced to 20% (from 24%)
1 January 2017: standard rate reduced to 19%
1 January 2016: range of goods subject to the 10% reduced rate is extended
To 30 September 2016: temporary reduction of the standard rate to 7% (from 10%) has been extended
Trinidad and Tobago
1 February 2016: rate reduced to 12.5% (from 15%); postponed from 1 January 2016
Other VAT/GST changes
1 July 2015: taxpayers required to issue e-invoices
1 July 2017: GST applies to e-services supplied by overseas business to Australian customers
1 July 2017: low-value imports threshold to be abolished
1 January 2016: VAT registration threshold increased to AZN200,000 (from AZN120,000)
1 July 2016: all VAT payers must issue VAT invoices electronically
1 January 2016: new tax point rules apply
1 January 2016: sales of software in Sao Paulo are subject to state VAT on the total sales price (previously twice the value of the carrier medium)
Currently considering GST obligations for nonresident e-commerce businesses
1 May 2016: VAT to be extended to real estate and property, financial and insurance services and lifestyle services
Until 31 December 2016: cross-border e-commerce pilot is being conducted in Hangzhou
2016: VAT system to be introduced to replace sales tax
1 January 2016: new control report required to be filed electronically with VAT returns
1 January 2016: increased controls regarding distance sales of goods and e-services supplied to non-taxable persons
1 January 2017: VAT system to be introduced to replace general sales tax regime
VAT registration threshold increased to EUR10,000 (from EUR8,500)
1 January 2018: new certification requirements for IT accounting systems and cash registers take effect
Gulf Cooperation Council (GCC)2018: member states have agreed to introduce a VAT system
1 January 2016: new rules introduced relating to the obligation to issue tax invoices and input tax deduction rights
1 January 2016: foreign businesses providing certain travel-related goods and services are required to register for VAT, subject to the registration threshold
Late 2016: proposed introduction of new indirect tax regime consisting of Central GST (CGST) and State GST (SGST)
1 July 2016: mandatory use of e-invoices by all taxpayers
1 January 2016: new penalty regime introduced for VAT reverse-charge mechanism violations
1 October 2015: consumption tax applies to the provision of digital services from overseas to Japanese customers
1 January 2016: use of e-invoices mandatory for certain VAT payers involved in international economic activities
1 January 2017: use of e-invoices mandatory for all VAT payers
1 August 2015: all VAT returns must be filed electronically
1 September 2015: VAT registration threshold decreased to EUR30,000 (from EUR50,000)
1 September 2015: overseas persons who operate in Kosovo through a permanent establishment are required to register, regardless of turnover
1 January 2016: reverse-charge mechanism applies to mobile phones, tablets, integrated circuit devices and various timber used as wood fuel
1 January 2016: VAT registration threshold increased to NS500,000 (from NS200,000)
1 October 2016: subject to the registration threshold, foreign suppliers of “remote services” must register and account for VAT
1 January 2016: new VAT Act implemented
1 June 2016: VAT system to be implemented (postponed from 1 April 2016)
1 April 2016: substantial changes apply to Form 394, which details supplies and acquisitions
1 January 2017: planning to apply VAT to e-services provided by overseas companies to Russian customers
Sao Tome and Principe
2017: expected to introduce VAT system
1 January 2016: cash accounting introduced
1 January 2016: scope of reverse-charge mechanism extended to all goods supplied by non-established taxpayers
1 July 2015: VAT applies to e-services purchased from abroad
1 January 2017: new reporting system for invoices expected to come into force
Plans to introduce a VAT system have been postponed until further notice
1 January 2017: certain overseas businesses selling goods ordered online to Swiss customers become liable for Swiss VAT
1 July 2015: nonresident suppliers of telecommunications and e-services are required to register
1 January 2016: use and enjoyment provisions apply to repairs made under UK insurance contracts
1 February 2016: domestic reverse charge introduced for wholesale supplies of electronic communication services
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