Indirect Tax News: Issue 3 - October 2021

In the world of indirect taxes, the topic of e-commerce is still popular. Thailand is now the fourth country in Southeast Asia to introduce VAT on electronic services, having done so after Indonesia, Malaysia and Singapore. Other countries, including Saudi Arabia, have provided further guidance on how to treat e-commerce transactions for VAT or GST purposes. In the EU, the European Court of Justice issued an important ruling in the Titanium case, in which the Court ruled that there is no fixed establishment for VAT purposes when there is no staff present in the country where an immovable property is leased to a lessee.

In other news, the UK introduced significant changes to the way that VAT is collected in the construction industry on 1 March 2021. As from that date, VAT-registered recipients of specific types of building and construction services—rather than the suppliers—are required to pay the VAT due on the supply directly to the UK tax authorities (HMRC) under a domestic reverse charge mechanism.

Finally, Poland would like to make the formation of VAT groups possible starting in 2022. Under the proposed VAT group rules, intragroup transactions would not be taxed, and a group would be able to report VAT by filing a single return. 

• THE EUROPEAN UNION:
  • CJEU confirms local staff required to have a fixed establishment for VAT purposes
  • CJEU rejects Swedish rules on VAT adjustment for real estate investments
• BRAZIL: Supreme Court confirms state VAT is excluded from calculation of the PIS/COFINS tax base
• CANADA: Manitoba: The last Canadian jurisdiction to tax digital
• INDIA: Rates of tax refunds under RoDTEP announced
• INDONESIA: Input VAT rules relaxed
• ISRAEL: Update on proposed legislation on VAT treatment of supplies of B2C digital services
• ITALY: Tax authorities clarify VAT treatment of price adjustments and imposition of penalties for wrongly charged input VAT
• THE NETHERLANDS:
  • Court rules industry-wide pension fund is entitled to deduct input VAT
  • Place of supply rules for intermediary services apply even when underlying supply is not subject to VAT
• OMAN: Updates on the new VAT regime
• POLAND: VAT grouping regime may apply in 2022
• SAUDI ARABIA: Tax authorities issue VAT e-commerce guide
• SINGAPORE: Overseas vendors supplying services to Singapore customers
• THAILAND: Foreign providers of digital services covered by VAT and 7% VAT rate extended
• UNITED ARAB EMIRATES: Federal Supreme Court decision in VAT fraud case forms part of a growing body of case law
• UNITED KINGDOM: Domestic reverse charge VAT introduced for construction service
• UNITED STATES: Sales Tax: State revenues - Where’s the money coming from?

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Content adapted from BDO Global.

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