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Archive for VAT

Tax Reform—Looking Beyond A Rate Reduction

A N 6.8

For the past few years, tax reform discussions have focused on broadening the base and lowering the rate. We are now hearing a bit more about consumption taxes including in the form of a credit invoice VAT like most of the world uses (in addition to their income taxes).

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Returning South Africans Importing Goods

hugo-van-1-26-2016

It is not unusual for South Africans to live and work overseas for some years, and then at some point, usually after receiving a second nationality, to return to South Africa. Many of these persons returning to South Africa wish to bring their household goods back with them. The SA Customs and Excise Act makes provision for a concession that allows such persons to import goods without having to pay import duties and VAT.

Unfortunately, many persons encounter hiccups with the process, and Breytenbachs Advisory are aware of persons who have been kept in custody at Customs for days due to non-compliance to the prescribed process. We have subsequently provided some answers to South Africans’ frequently asked question on the import of household goods to South Africa.

Who qualifies for the concession on the import of household goods to South Africa? Read more

Is There A VAT In Your Future?

John Stancil4

The value-added tax (VAT) has been adopted by every developed country and most developing countries in the world. There is, however, one exception –The United States. That may be changing as there is currently discussion regarding its adoption in the U. S.

The value-added tax is a tax on goods and services and is collected at every step in the production chain. This is unlike the sales tax, which is paid only on retail sales. In a sense it is similar to sales taxes that are currently in place in 45 states as it is a consumption tax. VAT rates, obviously, vary from country, but in a survey of OECD countries, the rate varies from a low of five percent to a high of 24.5 percent.

How the VAT Works

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EU’s New VAT “MOSS” – Relevance For MFA?

TaxConnections Picture - VAT Dice 3 - square

On January 1, 2015, the EU’s new approach for charging and collecting VAT on B2C sales of e-services and digital goods begins. The key to the approach is that all businesses will charge based on the customer’s location (destination basis). That makes sense for a consumption tax, but has its challenges. One key one is knowing where the customer is, which is not always easy to determine for digital goods relative to physical goods.

One administrative simplification is the Mini One Stop Shop or MOSS. This allows a business to register in one country for filing purposes. The business still has to collect the appropriate VAT for the country where the consumer is, but rather than quarterly filing in each country, the business just files in the MOSS country. That country makes sure the funds get to the right country (and handles the currency translation since not all EU countries use the Read more

European Court of Justice Judgement In The Skandia America Corporation VAT Case (C7/13)

TaxConnections Picture - VAT Dice 2 - square

The European Court of Justice held that the supply of services by a non-EU Head Office to a branch situated in the E.U. is now liable to VAT where that branch is part of a VAT group.

VAT grouping allows EU member states to treat two or more companies as a single entity for VAT purposes which means transactions between members of a VAT group are normally ignored for VAT purposes.

However, the ruling on this dispute between Skandia America Corporation and the Swedish Tax Authorities means that services previously deemed to be VAT exempt will now be subject to VAT rates of between 15% and 27%.

This decision is of particular relevance to the financial services industry since the Read more

Bitcoins Are Not “Currency” – Australian Tax Office

Bitcoin

The Australian Taxation Office (ATO) has just issued a guidance paper stating: “The ATO’s view is that Bitcoin is neither money nor a foreign currency, and the supply of bitcoin is not a financial supply for goods and services tax (GST) purposes.”

Furthermore, the ATO says: “Bitcoin is, however, an asset for capital gains tax (CGT) purposes.”

For businesses that use Bitcoins (or any other crypto-currencies) to buy and sell trading stock, the transactions will be treated for tax purposes as a bartering arrangement. Buying trading stock with Bitcoins will require businesses to charge the 10% GST on the coins. Selling trading stock for Bitcoins will mean the business can claim an input tax credit for Read more

Is There A VAT In Your Future?

TaxConnections Picture - VAT Dice 1 - square

The value-added tax (VAT) has been adopted by every developed country and most developing countries in the world. There is, however, one exception –The United States. That may be changing as there is currently discussion regarding its adoption in the U. S.

The value-added tax is a tax on goods and services and is collected at every step in the production chain. This is unlike the sales tax, which is paid only on retail sales. In a sense it is similar to sales taxes that are currently in place in 45 states as it is a consumption tax. VAT rates, obviously, vary from country, but in a survey of Organisation for Economic Co-operation and Development (OECD) countries, the rate varies from a low of five percent to a high of 24.5 percent. Read more

Should Schools And Students Pay Sales Tax (or VAT)?

TaxConnections Picture - VAT Dice - square

It might seem odd for a state school or any government agency to pay taxes. Generally, they are exempt from income and property taxes, but likely pay sales tax (or VAT if outside the US) on purchases. Students of the state schools also pay sales tax on taxable items they purchase from the school bookstore or for their education (such as books).

Isn’t this just a roundabout way for the state to be paying tax to itself? Would it be more efficient to exempt purchases of state schools and agencies from sales tax?

What reminded me of this issue was an article about a bill (HB 4165) introduced in Singapore to create a VAT exemption for goods and services purchased from schools. [“Bill filed to exempt goods sold in schools from VAT,” by Miranda, Business World Online, Read more

VAT Consequences For I.T. Companies In Ireland – Part IV

TaxConnections Picture - VAT Dice - square

What needs to be considered prior to the introduction of the MOSS Scheme on 1st January 2015 by businesses already established in Ireland or thinking about establishing in Ireland?

• It is essential to examine your contract to establish who exactly is paying you and if your customer is a taxable or non taxable person. This is particularly important in the context of undisclosed agents/commissionaire structures, etc.

• You must determine where your B2C customers are located. Your business may require additional contractual provisions and amendments to your systems to include this information.

• It is important to examine the impact of the different VAT rates in each E.U. member state Read more

VAT Consequences For I.T. Companies In Ireland – Part III

TaxConnections Picture - VAT Dice - square

From 1 January 2015, supplies of telecommunications, broadcasting and electronically supplied services made by EU suppliers to private, non-taxable individuals and non-business customers will be liable to VAT in the customer’s Member State.

The current place of supply/taxation is where the supplier is located, but from 1st January 2015 this will move to the place of consumption or the place where the consumer normally resides or is established.

Suppliers of such services will need to determine where their customers are established or where they usually reside. They will need to account for VAT at the rate applicable in that Member State. This is a requirement regardless of the E.U. state in which the Supplier is Read more

VAT Consequences For I.T. Companies In Ireland – Part II

TaxConnections Picture - VAT Dice - square

When we talk about “electronically supplied services” we mean:

• Website supply, web hosting, distance programme and equipment maintenance.

• Software supply and upgrades.

• Supply of distance teaching.

• Supply of film, games and music.

• Supply of artistic, cultural, political, scientific and sporting as well as entertainment broadcasts and events. Read more

VAT Consequences For I.T. Companies In Ireland – Part I

TaxConnections Picture - VAT Dice - square

For many businesses moving to Ireland, especially I.T. companies, a considerable amount of research and planning into our tax regime is usually carried out in advance. From experience, however, the question these companies rarely ask themselves is “what are the key VAT issues affecting our company if we locate to Ireland?

The current Irish VAT rules are as follows:

• The place of supply for businesses established in the E.U. who provide electronically supplied services to private consumers within the E.U. is the E.U. member state in which the supplier is established. For example, if an I.T. company established in Ireland supplies digital materials via the market to a private consumer living in France, the place Read more

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