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30 Jun

Global VAT Update – June 2018

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Colombia VAT on e-services July 2018

Colombia has imposed VAT on electronic services to their consumers by non-resident providers, which will come into effect on 1 July 2018.

The national tax and customs authority, DIAN (Dirección de Impuestos y Aduanas Nacionales) requires foreign providers to VAT register. DIAN also require the reporting of any income from digital services. Any service provided to a consumer must have its tax residence, domicile and permanent establishment in the country. This involves a simplified registration and filing process, completed online to gain a unique TIN (tax identification number) for the supplier. VAT returns are due bi-monthly in Colombia.

The Netherlands increasing reduced VAT rate to 9%

October 2017 saw the incoming of a coalition government in The Netherlands, where new potential tax plans involved talk of increasing reduced VAT rate of 6% to 9%. The estimated revenues that this increase will generate, will be used amongst other things to finance the proposed reduction of income tax.

Coming into effect from 1 January 2019, the Dutch reduced VAT rate will apply to the following:

Food and drinks in shops
Medicines, bandages and other items intended for medical use
Books
Flowers, plants and arboricultural products
Sport facilities
Bicycles, footwear and clothing repair
Services of hairdressers
Transport of people
Accommodation in hotels and campsites
Food and drinks in restaurants
Admission to circuses, zoos, public museums, musical performances, theatres, cinemas, sports events and amusement parks
The cleaning of residences
Hungary raises VAT registration threshold
The country’s VAT registration threshold is set to raise from €35,000 to €48,000 per annum, from 1 January 2019.

This registration threshold will only apply to resident companies, as non-resident companies must immediately VAT register if they are undertaking taxable sales in Hungary.

The Ministry for National Economy in Hungary announced plans to increase VAT exemption threshold for small businesses to HUF 12 million in annual turnover. Hungary’s VAT rules state that all businesses are generally required to register. For those with an annual turnover below the threshold, applications may be made for exemption status. Once exemption status is granted, the business will not have to charge VAT on its supplies or recover input VAT on purchases and is generally not subject to VAT return requirements.

However, this is still subject to The European Commission’s approval.

Angola introduces 14% VAT Jan 2019

Angola is set to replace its existing 10% Consumption Tax regime with a 14% VAT system from 1 January 2019. Angola is the last country in the Southern African Development Community to introduce VAT. Until the start of 2021, VAT will be mandatory for large taxpayers and only voluntary for small taxpayers but will become compulsory for all from January 2021.

More goods and services will be held liable to VAT than the existing Consumption Tax. No formal VAT code or implementation guidance has been published at present.

Angola is seeking to broaden its revenue sources and become less dependent on volatile oil duty revenues since the country’s debt level increased following the 2014 oil price collapse. Like the Arab Gulf States, this has led the country to introduce VAT as a reliable source of state income.

Croatia VAT rate to drop by 1%

In a statement made by The Croatian Prime Minister, Andrej Plenkovic, the VAT percentage is set to drop by 1%. At a congress of Croatian export business, Plenkovic reiterated his government’s measure to decrease VAT from 25% to 24%.

The Prime Minister also stated that lowering the rate of VAT will be part of a range of measures “It will be part of measures which won’t endanger the budget’s revenue side. On the contrary, we believe that the combination of various measures will facilitate better revenues, reducing the fiscal pressure on both taxpayers and enterprises” hoping to make Croatian exporters more competitive.

Despite the drop, set to be in force by 2019, Croatia will still have one of the highest VAT rates in the world. Some of Europe’s main economies have lower VAT rates than Croatia, UK and France both at 20% and Germany at 19%.

This story was originally posted on VAT Life, Quipsound’s quarterly newsletter in association with Essentia Global Services. Click here to see the story and more on VAT Life.

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