Our lead article analyses recent guidance on U.S. legislation that targets forced labour in the supply chains of products entering the country, specifically from the Xinjiang Uyghur Autonomous Region of China (XUAR). The reach of the legislation is broad and establishes a rebuttable presumption that goods manufactured in whole or in part in the XUAR or produced by certain entities are the products of forced labour. Detailed guidance to importers addresses areas such as due diligence, the evidence needed to rebut the forced labour presumption, and how detentions, exclusions and seizures of imported goods will be carried out. In another North American development, Canada will be introducing a luxury tax on certain new cars, aircraft and vessels starting in September, with the tax applying at the point of purchase where the final sale price exceeds a specified threshold. And in South America, Chile is introducing new VAT withholding obligations on financial intermediaries as from August.
In the EU, the CJEU has issued a decision that clarifies how and when a fixed establishment arises for VAT purposes where the taxpayer has a subsidiary in another member state, and AG Pitruzzella has opined that a holding company may not recover input VAT incurred on a taxable supply of services contributed free of charge to its subsidiaries and used for their VAT-exempt activities. France has introduced an amnesty for certain foreign businesses that failed to register for VAT, the Netherlands will no longer allow foreign establishments to be part of a VAT group and Poland’s new VAT grouping rules are further postponed until 1 January 2023. An article on UK customs duty rules for goods moving between the UK and EU highlights the need for robust controls and oversight.
Moving to the Asia-Pacific, India’s supreme court has issued a decision that may require companies with secondment arrangements with another group company to revisit their positions because the court held that employee secondment contracts where salary is treated as a reimbursement to the home country are subject to service tax. China has accelerated the payment of VAT credit refunds and a new regulation in Indonesia governs the VAT treatment of trading through electronic systems.
In this edition:
- Canada: Highlights of the new luxury goods tax
- Chile: IRS announces new VAT withholding obligations for intermediaries
- China: Schedule for refund of excess input VAT credit accelerated
- European Union:
- France: Nonresident suppliers of distance sales have opportunity to regularize French VAT liabilities
- Indonesia: Implementing regulation issued on VAT treatment of e-commerce transactions
- International: Indirect tax bytes
- Poland: VAT grouping rules again postponed
- United Arab Emirates:
- United Kingdom: 10 common pitfalls with customs declarations
- United States:
Content adapted from BDO Global