Richard Cornelisse

Archive for the ‘Tax News’ Category

Action Plan on VAT – European Commission

In EU development, Indirect Tax Strategic Plan, Processes and Controls, tax avoidance, Tax News on 08/04/2016 at 11:56 am

On 7 April 2016 the Commission adopted an Action Plan on VAT – Towards a single EU VAT area. The Action Plan sets out immediate and urgent actions to tackle the VAT gap and adapt the VAT system to the digital economy and the needs of SMEs. It also provides clear orientations towards a robust single European VAT area in relation to the definitive VAT system for cross-border supplies and proposes options for a modernised policy on EU rules governing VAT rates.

Key actions

Recent and ongoing policy initiatives

Removing VAT obstacles to e-commerce in the single Market

The current VAT system for cross-border e-commerce is complex and costly for Member States and business alike.

The Commission will, as part of its Digital Single Market strategy, present a legislative proposal by the end of 2016 to modernise and simplify VAT for cross-border e-commerce by:

  • Extending the current One Stop Shop concept to all cross-border e-commerce, including distance sales,
  • Introducing common EU-wide simplifications measures to help small start-up e-commerce businesses,
  • Streamlining audits in this sector (home country audits), and
    Removing the VAT exemption for the importation of small consignments from suppliers in third countries.

SMEs VAT package
SMEs bear proportionally higher VAT compliance costs than large businesses due to the complexity and fragmentation of the EU VAT system.

Further to the new Single Market Strategy, the Commission is preparing a comprehensive simplification package for SMEs that will seek to create an environment that is conducive to their growth and favourable to cross-border trade. In particular, the special scheme for small enterprises will be subject to review. This proposal will be presented by the end of 2017.

Urgent measures to tackle the VAT Gap

The ’VAT gap’ between expected revenue and revenue actually collected by national authorities is estimated at around EUR 170 billion, which equates to 15.2% of revenue loss. This calls for urgent action on several fronts:

  • Improving cooperation within the EU and with non-EU countries
  • Towards more efficient tax administrations
  • Improving voluntary compliance
  • Tax collection

See the 20 measures to tackle the VAT gap Choose translations of the previous link .

In 2016, the Commission will present:

In 2017, the Commission will present:

  • Proposal to enhance VAT administrative cooperation and Eurofisc. Choose translations of the previous link

Towards a robust single European VAT area

Definitive VAT regime for cross-border trade

The present VAT system, which has been in place since 1993 and was supposed to be transitional, splits every cross-border transaction into an exempted cross-border supply and a taxable cross-border acquisition. It is like a customs system, but lacks equivalent controls and is therefore the root of cross-border fraud. It is also complex for the growing number of businesses operating cross-border and leaves the door open to fraud: domestic and cross-border transactions are treated differently and goods or services can be bought free of VAT within the Single Market.

To this end, the Commission will present in 2017 a legislative proposal for a definitive VAT system for cross-border trade. This definitive VAT system will be based on the principle of taxation in the country of destination of the goods, as agreed by the European Parliament and the Council.

The Commission considers that in the definitive VAT system, the taxation rules according to which the supplier of goods collects VAT from his customer should be extended to cross-border transactions. This will ensure consistent treatment of domestic and cross-border supplies along the entire chain of a production and distribution, and re-establish the basic features of the VAT in cross-border trade i.e. the fractionated payments system with its self-policing character.

See the infographics on pages 2 and 3. Choose translations of the previous link .

Source: Action Plan on VAT – European Commission

Is VAT knocking at the front door of the US?

In Indirect Tax Strategic Plan, Macroeconomic effects of VAT, Phenix Consulting, Processes and Controls, Tax News, US VAT introduction on 19/09/2015 at 10:57 pm


Puerto Rico to fix its financial crisis introduces a VAT system per April 1, 2016 to replace its current sales and use tax system. A wide range of supply of goods and services occurring after March 31, 2016 will be subject to a 10.5% or 0% VAT.

Is VAT knocking at the front door of the US?

It is important to know that Puerto Rico is not a US state, but more a Commonwealth of the US. It has local autonomy, however, the government of Puerto Rico falls ultimately on the US Congress. The elected governor of Puerto Rico occupies the highest public office. Puerto Ricans are US citizens. However, only Puerto Ricans who live in the US can vote for the US President in the general elections. Its residents are subject to US laws and pay income taxes to the US government.

If raising revenue and combat of the deficit is successful, the rest of the US will take notice.

How to be ready in time

See below PowerPoint; it contains a roadmap, overview of SMEs needed and a Bahamas case study.

Puerto Rico VAT readiness

Schermafbeelding 2015-09-20 om 17.02.13

Bahamas’ VAT introduction

Bahamas introduced a VAT system that was supposed to come into force on Juli, 2014, bit was delayed to January 1, 2015.

We provided support to the largest Telecom company on the Bahamas for system and process implementation including training.

The go-live of the new VAT system was successful – see our case study, roadmap and core team in below PowerPoint:

  • VAT and systems new legislation: overview of important topics for a new VAT implementation related to systems and checklist
  • Our Bahamas experience showed as well that a Caribbean Island requires a bit different approach than a mature EU VAT country

From the case study it follows that we have supported the largest Telecom company on the Bahamas (also a Caribbean Island) with the following items:

  • Review of the proposed legislation and impact on the business processes
  • Design of VAT logic in the various systems (Billing systems, Point of Sale System, Accounting system)
  • Communication with suppliers of the IT systems about requirements
  • Implementing VAT logic in some IT systems
  • Test design and actual testing
  • VAT training to key staff
  • Master data analyses, design and review
  • VAT return process and additional VAT controls
  • Communication with important customers/vendors
  • Design of new VAT compliant business processes

Schermafbeelding 2015-09-20 om 17.05.10

Bahamas VAT readiness

Richard Cornelisse

SAP add-on: never run out of tax codes

In Indirect Tax Automation, Indirect Tax Strategic Plan, Processes and Controls, SAP add on, SAP add on for VAT, SAP for VAT, SAP SLO renaming tax codes, System Landscape Optimization, Tax News, Technology, VAT automation on 15/09/2014 at 4:02 am

Business Challenge

Many SAP clients have multiple VAT registrations. Due to principal structures, centralized functions, complex business models for sales of goods, cross-border and drop shipment transactions, these companies often use more than 900 SAP tax codes. These organizations will face difficulties regarding the standard SAP tax code design which will cause not only tax compliance, but commercial issues as well.

As a Standard SAP tax code consists of only 2 characters, the number of possible tax codes is limited. Numerous companies use a considerable amount of tax codes and risk facing a “shortage” of the necessary tax codes. Multinationals have asked SAP for a solution over the last couple of years, but to date SAP has not provided a proper solution.

To our knowledge, SAP has developed a solution with a 4-digit tax code for one company. However, we understand that this SAP 4-digit tax code solution will not be expanded to other customers because of risks concerning the stability and robustness of the solution. This means that multinational companies still have insufficient options when facing issues with the limited number of available tax codes.

In many countries around the world, the VAT revenues make up an important part of the total revenues of the governments. Combined with the financial crisis and the need to reduce the budget deficit, VAT rates are changed frequently.

The change of a VAT rate has a significant impact on a SAP system. Due to the standard set-up in SAP, for every new VAT rate multiple new tax codes must be created. As a consequence, a significant amount of additional changes are required to get the new tax code up and running for all SAP transactions.

Alternative market solutions

The following alternative solutions are available in the market. However, all have considerable drawbacks.

  • Use the special characters ($,/,\,& etc.) for the tax code – even with the extended number of tax codes some companies will be running out of available tax codes and tax codes with these special characters are not user friendly to work with
  • Purchase external tax engine – besides high purchase and maintenance costs external interfaces have to be used, which for certain clients is in conflict with their own IT policy, as the use of standard SAP is preferred
  • Renaming of tax codes (SAP’s System Landscape Optimization projects: SLO) where the existing tax codes are archived and a new tax code design could be created. Such restructuring will however not avoid creating multiple new tax codes in the future when the VAT rate is changed. Companies will face shortages again in the future.

What do we offer?

Schermafbeelding 2014-11-09 om 10.25.40


Schermafbeelding 2014-11-10 om 20.56.30

View Richard Cornelisse's profile on LinkedIn

60% of companies say VAT/GST have a negative impact on their business

In Audit Defense, Benchmark, EU development, Indirect Tax Automation, Indirect Tax Strategic Plan, Tax News, Technology, VAT automation, VAT planning on 24/07/2014 at 6:28 pm

The importance of indirect tax has increased over the last couple of years. While the rates for direct tax, corporate income tax, are decreasing, the rates for indirect tax keep rising.

Time for Richard Cornelisse, editor of Global Indirect Tax Management, to act on that: ‘At multinational companies we’re easily talking about amounts of over 5 billion euros of indirect tax flowing through the books.

Yet according to big4 surveys, the related control mechanisms are still inadequate. Not only can an error in the accounts lead to major additional tax assessments and substantial penalties, with amounts like these, it can be devastating for the reputation of a listed company.’

The global bench mark study on VAT / GST 2013 of KPMG among multinationals (clients and relations), inter alia, shows that most companies haven’t yet developed an effective VAT/GST approach.

Tax Authorities, due to technological innovations, have become increasingly better in executing their tax audit. The probability that the Tax Authorities will issue additional assessments and penalties in the near future because errors in indirect tax are detected, increases by the day.’

Isn’t it strange that the indirect tax still isn’t high on the agenda of the Head of Tax and the CFO?

Cornelisse: ‘It is indeed. Not only are the amounts in the indirect tax cycle continuingly rising internationally, these surveys also reveal that the Tax Authorities, due to technological innovations, have become better at executing their tax audit.

The chance that the Tax Authorities will issue additional assessments and penalties in the near future because errors in indirect tax are detected, increases by the day.’

Still, companies hardly seem to react.

Cornelisse: ‘On the one hand it’s understandable. Because of the structure of determination and control within organizations, indirect tax is dealt with completely differently than direct tax.

The Head of Tax is responsible for all taxes in the company, but it appears that the main focus is on direct tax. The Indirect Tax Function often reports to the Head of Tax, who, in turn, reports to the CFO. This is one of the reasons that hardly any KPIs are determined for VAT/GST and the CFO almost exclusively attends to direct tax regarding tax risks.

The CFO has a lot on his plate and lines of reporting often fail to sufficiently pass on the risks of indirect tax and the necessity of managing this adequately.’

‘The chance that the Tax Authorities will issue additional assessments and penalties in the near future because errors in indirect tax are detected, increases by the day.’

Breaking the silo structure

But doesn’t the CFO’s financial auditor point out the large risks associated with insufficient control of indirect tax?

Cornelisse: ‘That is indeed strange since I assume that the results of the benchmark studies are not only shared with clients, but especially within the organization itself, including colleagues in the audit department.

In terms of quality and providing integrated service, it can be expected that a position be taken each year concerning materiality and thus the necessity for further examination during the annual audit.

It is remarkable, however, that regarding indirect tax, the tax advisory departments of the Big4 mention the increasing risks of additional assessments, penalties and loss of reputation because risks are rising and KPIs and controls of indirect tax are lacking, but that this knowledge is hardly ever taken into account during the financial statement audit.

The CFO assumes that the knowledge acquired within the walls of the large accountancy and tax consultancy firms is shared, but the tax advisors appear to be prone to focus solely on serving their own circle of clients and to a far lesser extent on strengthening other services within the organization itself. Focus on one’s own expertise is good on the one hand, but it can also lead to reduced transfer of information.’

Isn’t this where the financial auditor comes in?

Cornelisse: ‘It’s understandable from the financial auditor’s perspective that the accounting firms don’t always deploy the knowledge available in their own tax advisory department when performing the financial statement audit.

The tax advisors primarily address their own clients, for which personal KPIs such as sales turnover must be achieved, and therefore have an individual higher rate structure. The financial auditors apply sharp rates in their market competition, and expensive internal staff hours spent on control of indirect tax are limited as much as possible. It costs a lot of money to hire internal knowledge and that money isn’t always available in economically difficult times.

They have, however, a responsibility, especially when it comes to managing reputational damage.’

If the facts say that more control, more KPIs are required in monitoring the indirect taxes, then why doesn’t the CFO take that on?

Cornelisse: ‘The most important reason is that the CFO has a lot on his plate. Indirect tax has no priority.

Due to economical circumstances, choices have to be made regarding budgets for internal control. And because indirect tax has traditionally received little attention, it will surely not get more in times of crisis.

The deployment of expensive fiscal knowledge therefore usually remains limited to control of direct tax.’

‘The Indirect Tax Function is aware of the fact that it is understaffed and that budget is too limited to optimally execute its tasks, but they often don’t know how to change this and get it on the agenda of the CFO.

Surveys are alarming

If the risks are truly this high, then shouldn’t it receive more attention from the CFO?

Cornelisse: ‘That’s exactly the reason I started the Global Indirect Tax Management initiative. It’s not that the problem is unknown among the multinationals, but they just don’t share information sufficiently.

The Indirect Tax Function is aware of the fact that it is understaffed and that budget is too limited to optimally execute its tasks, but they often don’t know how to change this and get it on the agenda of the CFO.

The surveys of the Big4 are clear: we are talking about extremely large amounts of money that lack appropriate control, but because KPIs have never been developed for this particular purpose, the risks remain outside the CFO’s field of view.

Source: KPMG Indirect Tax Compliance Services – go beyond the data

  • “Indirect tax is the third largest item of working capital
    1. Sales
    2. Cost of sales
    3. Indirect tax
  • 60% of companies say VAT/GST have a negative impact on their business
  • Only 1 in 8 businesses have a global head of VAT/GST that has visibility over VAT / GST returns prepared locally”

Source: EY Managing indirect tax data in the digital age

“External drivers

  • Governments are increasingly relying on indirect taxes to meet their budgetary needs
    VAT rates have increased worldwide in recent years, and new indirect taxes are being introduced in many countries for sectors such as banking and energy
  • The “fair tax” debate has put companies’ tax affairs firmly in the media spotlight – drawing intense scrutiny not only from tax administrations, but also from regulators, investors and even the public
  • Tax and customs administrations are focusing more than ever on full compliance and using risk analytical tools to target their resources to tackle tax leakage and tax avoidance. They are collecting more taxpayer data and doing more with it”

One of the tools the Global Indirect Tax Management initiative offers, are aimed at achieving better awareness.

The fact that direct and indirect tax work in a different way must also be taken into account.

The Head of Tax should be more involved in the Indirect Tax Function. The Head of Tax mainly gets his information from corporate finance and not so much from other departments. And that is precisely where the indirect tax is managed and must be operated. It is therefore often not visible for the Head of Tax how important the controls on indirect tax are.

If the Head of Tax and the Indirect Tax Function would figure out how to cooperate more efficiently, they will also bring indirect tax more into the spotlight of the CFO.’

‘Just consider: a mistake of one percent can make the difference between profit and loss for a multinational company. Explain that to your shareholders.’

Carried by the organization itself

How can change be accomplished?

Cornelisse: ‘It’s essential that change comes from the organization itself. An advisor can repeat this over and over, but if it isn’t carried out within the organization, by the people who actually have to work with it, nothing will change.

It starts with the people in the organization becoming aware of the amounts that are at stake and the risks of something going wrong. Big4 surveys show unanimously that we’re easily talking about amounts of 5 billion euros concerning indirect tax. Benchmark studies repeatedly create the same picture: too little control, too few KPIs and when a mistake is made in the control, it usually concerns large amounts of money.

A mistake of one percent can make the difference between profit and loss for a multinational company. Explain that to your shareholders.’

The reason is that both from within the organization – that is, via the Indirect Tax Function, the Head of Tax and the internal audit – and from outside – that is, financial auditor – insufficient signals reach the CFO in order to raise priority of indirect tax.

Cornelisse: ‘That’s right. And that deadlock must be broken. The internal and external stakeholders are all chains in the process and if one isn’t cooperating, change is difficult to accomplish.

It is essential that financial auditors also read the surveys, acknowledge the risks and discuss them with the CFO. The best outcome would be if the indirect tax would be controlled by default in audit or if a stand point would be taken not to do that.

In case control is required, all methods and tools developed by one’s own Tax Advisory Department of the Big4 – (technology, methods and tools such as reconciliations and data analytics including auto generated reports based on the right data sets)  are to be deployed in order to ensure overall quality of service.

This influences the CFO externally, can bring about change top down and can lead to new instructions for internal audit and Head of Tax. Of course the indirect tax function itself has to improve its working relation with the head of tax.

As a result, the Indirect Tax Function can have the tools (mandate, resources, budget etc.) necessary to execute its tasks adequately.

Richard Cornelisse is editor of Global Indirect Tax Management.

One Stop Shop guidelines for 2015: a practical guide

In Indirect Tax Strategic Plan, Tax News, Technology, VAT planning on 14/05/2014 at 12:00 pm

A practical guide has been prepared in order to provide a better understanding of the EU legislation relating to the mini One Stop Shop, as well as the functional and technical specifications for the special schemes, as adopted by the Standing Committee on Administrative Cooperation (SCAC).

This guide is not legally binding and is only practical and informal guidance about how EU law and EU specifications are to be applied on the basis of the views of the Commission’s Directorate General for Taxation and Customs Union.

It is the product of collaborative work between the Directorate General for Taxation and Customs Union and Member States.

The guide is work in progress: it is not a final product, but it reflects the state of play at a certain point in time in accordance with the knowledge and experience available. Over time, it is expected that additional elements may be needed.


via Telecommunications, broadcasting & electronic services – European commission.

B2C place of supply change: telecommunications, broadcasting and electronic services

In EU development, Indirect Tax Strategic Plan, Processes and Controls, Tax News on 09/05/2014 at 11:31 am

From 1 January 2015, telecommunications, broadcasting and electronic services will always be taxed in the country where the customer belongs*:

  • whether customer is a business or consumer
  • whether supplier based in the EU or outside

* For a business (taxable person) = either the country where it is registered or the country where it has fixed premises receiving the service.

* For a consumer (non-taxable person) = the country where they are registered, have their permanent address or usually live.

Legislation now – and after 2015

Sales to final consumers B2C – overview


Telecommunications, broadcasting & electronic services (1)

Services supplied by/to

EU consumer
in EU country 1

EU consumer
in EU country 2

Non-EU consumer(3)

EU supplier
(EU country 1)

Taxable in EU country 1

Taxable in EU country 1


EU supplier
(EU country 2)

Taxable in EU country 2

Taxable in EU country 2


Non-EU supplier

Taxable in EU country 1(2)

Taxable in EU country 2(2)



  • (1) One-time registration (MOSS) available for electronic services.
  • (2) Taxable in country of effective use & enjoyment, if this is not the country where the customer belongs.
  • (3) Unless used in a country that applies the effective use & enjoyment rules.


Telecommunications, broadcasting & electronic services

Services supplied by/to

EU consumer
in EU country 1

EU consumer
in EU country 2


EU supplier
(EU country 1)

Taxable in EU country 1

Taxable in EU country 2(1)


EU supplier
(EU country 2)

Taxable in EU country 1(1)

Taxable in EU country 2


Non-EU supplier

Taxable in EU country 1(1)

Taxable in EU country 2(1)


  • (1) One-time registration (MOSS) available.
  • (2) Unless used in a country that applies the effective use & enjoyment rules.

Changes to one-time registration scheme (MOSS) from 2015

Online declaration/payment

For supplies to consumers, both EU and non-EU businesses can use a web portal in the EU country where they are VAT-registered to declare and pay the VAT due in their customer’s EU country.

Access : Forum Global Indirect Tax Management for additional information

From: Telecommunications, broadcasting & electronic services – European commission.

OECD’s guidelines on value-added tax find widespread support

In General, Macroeconomic effects of VAT, Tax News on 06/05/2014 at 8:41 am

AN IMPORTANT development in the VAT world occurred recently in the Japanese capital Tokyo, when 86 countries endorsed a new set of international guidelines, devised by the Organisation for Economic Co-operation and Development (OECD) committee on fiscal affairs, aimed at mitigating the risks of double taxation or unintended double non-taxation.

About 160 countries have adopted value added tax (VAT) systems over the years, and at the same time international trade in goods and services has expanded rapidly. This means greater interaction between VAT systems, and increased risks.

OECD deputy secretary-general Rintaro Tamaki said at the meeting of the OECD Global Forum on VAT in Tokyo that jurisdictions often used different VAT rules to determine which jurisdiction had the right to tax a cross-border transaction, or they interpreted similar rules differently. These differences had caused “severe obstacles” for international trade and investment and hinders economic growth, he said.

“Policy action to address this issue was urgently needed, and the OECD has therefore made it a key priority to develop consensus around internationally agreed principles for a coherent application of VAT to international trade.”

South Africa is one of the 86 countries that endorsed the guidelines.

Tax authorities and the business community realised as far back as the late 1990s that VAT rules required greater coherence to avoid burdens on global trade. The OECD’s work started in 1998 with the Ottawa Conference on electronic commerce.

The 2014 OECD international VAT guidelines state that not only electronic commerce poses challenges, but that VAT could distort cross-border trade in services and intangible assets more generally, as they cannot be monitored at border posts in the same way as goods.

The OECD guidelines focus on the neutrality of VAT and the definition of the place of taxation for cross-border trade in services and intangibles between businesses. They accept the widespread consensus that the destination principle is the international norm: revenue accrues to the country of import where final consumption occurs.

The guidelines encourage similar levels of taxation where businesses in similar situations carry out similar transactions, that VAT rules be framed in such a way that they are not the primary influence on business decisions, and where specific administrative requirements for foreign businesses are considered necessary, they should not impose a disproportionate or inappropriate compliance burden on the businesses.

Tax authorities are encouraged to apply tax laws fairly, reliably and transparently; to encourage compliance by ensuring the costs of complying are kept to a minimum ; and to deliver quality information.

PwC VAT leader Charles de Wet, who attended the Tokyo meeting, says SA is already adhering to the guidelines to a large extent.

The problem is that not all its trading partners in Africa are doing the same.

Several African countries also attended the Tokyo conference, including Kenya, Zambia, Ghana and Mozambique. It is not clear whether all of them endorsed the guidelines.

Mr de Wet says all the positive elements expected in the design of a good VAT system have been encapsulated in the guidelines.

“VAT is supposed to work through the production cycle and it should be borne by the end consumer of the product or service and not by business.” VAT is a major source of revenue for governments, which take a knock from under-taxation, but double taxation hurts trade.

“The boxes that need to be ticked include whether the system offers neutrality, certainty and efficiency,” says Mr de Wet.

“It is an important development in the VAT world, and it is important for traders and tax authorities to take note of where VAT is being positioned in the tax value chain,” says Mr de Wet.

South African Revenue Service spokesman Adrian Lackay says the guidelines offer revenue authorities greater certainty on how VAT should be imposed on cross-border services. Ignoring them could lead to “either double taxation or double nontaxation”. He says South African legislation will have to be amended in the near future to comply fully with the OECD guidelines, as domestic legislation is not yet aligned with them in certain instances.

These amendments will be done under the guidance of the National Treasury.

“Fraudulent VAT activities and refund claims, in particular, pose significant risks to the fiscus. These risks have to be managed continuously to protect the fiscus against abuse and fraud,” says Mr Lackay.

VAT collections in South Africa amounted to 26.4% of the government’s main sources of tax revenue in the 2012-13 fiscal year, compared with 24.7% in 2008-09. Total collections increased from R191bn in 2009-10 to R240bn in 2012-13.

From: OECD’s guidelines on value-added tax find widespread support | Business | BDlive by Amanda Visser

January 2014 International Indirect Tax Updates

In EU development, General, Indirect Tax Automation, Tax News on 08/01/2014 at 1:34 am

January 2014 International Indirect Tax Updates

By Patrycja Wolniczek Mucha On January 2, 2014

Along with released budget measures for year 2014 many countries have passed legislation or announced a number of changes that have an impact on the VAT rates. These changes are a response to economic and budgetary developments in the particular country. We have summarized the upcoming VAT rate changes with the following countries.

The changes will become effective 1 January 2014 unless otherwise noted.


In accordance with the Law Amending the Law on Value Added Tax of 4 December 2013, the reduced VAT rate of 10% will increase to 13%.  The government expects that these measures along with excise and income tax changes will reduce the budget deficit by HRK 2 billion or around 0.6% of Gross Domestic Product and by HRK 4 billion or 1.2% of GDP in 2015 and a further 1.7% of GDP in 2016. On 1 July 2013 Croatia became a Member of the European Union.


In year 2012 the Cypriot government has announced a VAT increase in two stages. In accordance with the plan, on 14th January 2013 the standard rate went up by 1% reaching 18%. A further 1% increase will come into effect on 13th January 2014. The new standard rate will be 19% and the reduced rate will increase to 9%. Cyprus’s VAT change is an economic response to the Greek financial crisis. In order to secure beneficial loan terms with Russia, the government had to agree to the VAT changes as part of the bail out by the ‘Troika’ of the European Union, European Central Bank and International Monetary Fund.

Dominican Republic

Under the Law No. 253-12 effective 1 January 2014 the reduced VAT rate of 8% will go up to 11%. The VAT change is part of the 2012 tax reform which included the initial reduced rate increase to 8% in 2013 and the standard rate hike to 18%. According to the law schedule the reduced rate will further increase to 13% in 2015 and to 16% in 2016. The standard rate is planned, however, to go down to 16% in 2015. Subject to the reduced rate increase are most of the basic food commodities.


The standard VAT rate will increase to 20% on 1 January 2014. In addition, many basic commodities will become more expensive as the reduced VAT rate will go up from current 7% to 10%. In Corsica the current 8% reduced rate will also go up to 10%. The increase reflects changes included in the Amending Finance Law no. 2012-1510 of 29 December 2012.  Article 68 of the above mentioned law, initially provided for a decrease in the lower reduced VAT rate from 5.5% to 5% as of 1 January 2014. The new Budget Finance Law 2014 draft keeps, however, the 5.5% rate in place for 2014.  With the VAT increase France will be joining most other EU member states which have been shifting the tax burden from business onto consumers in a bid to attract and retain multinational businesses.


Following the 2014 Budget, the parliament passed a new VAT Act, which increased the standard VAT rate from 12.5% to 15%. The government justifies the increase with the need of infrastructure investments in accordance with the development agenda.  Currently, Ghana is heavily reliant on deposits of gold. Expanding the revenue basis with higher VAT would help raise €300 million.


As published in the Official Gazette of Honduras and in accordance with Decreto No. 278-2013, the standard VAT Rate went up from 12% to 15% and the increased VAT rate went up from 15% to 18% effective 1 January 2014. The increase was included in the package of fiscal measures aiming at preventing the country from a major economic crisis. The economists assess the impact of changes as intense enough to generate, according to estimates of the Ministry of Finance, about three billion Lempiras in inflation by rising prices of basic commodities. The rate change will also contribute to increase the poverty rate among Hondurans.



In accordance with the new Consumption Tax Act, the consumption tax will increase from 5% to 8% with effect from April 2014. This change is the first of a two-step process which is expected to reach 10% by 2015. The reason for the hike relates to the government’s long-term plan to reduce its primary budget deficit by 2015 and stabilizing its debt burden by 2020. Before a final decision on the 2015 increase, the government will have to further examine economic factors and other conditions.


With the economic package, the government repealed the current 11% rate of VAT, as applicable for the border region (the border between Mexico and the United States), and will impose the general VAT rate of 16% as of 1 January 2014. The change will have a negative impact on local business and employment in the border zone.

Portugal Autonomous Regions – Azores

As part of the 2014 budget and in accordance with the budget approving Decree n. º 191/XII, the standard and both reduced VAT rates will go up. As of 1 January 2014 the standard VAT rate will increase from 16% to 18%, the intermediate rate from 9% to 10% and the reduced rate from 4% to 5%.


The reduced VAT rate of 8% will become 10%. Serbia’s Finance Minister Lazar Krstic explained the measure as a necessary step to avoid a financial meltdown. The increase will help close the budgetary gaps but will also hit the poorest parts of society hardest.

As a result of economic factors the following initially scheduled VAT rate changes will not be implemented in the upcoming months:


According to the Belarusian Deputy Prime Minister Piotr Prokopovich last statement, the current VAT rates will remain unchanged for the year 2014. Earlier this year, the Government announced a plan to increase the standard VAT rate to 22% in 2014.


The current VAT rates will remain unchanged as a result of the last VAT Act amendment.   The VAT rates were temporarily increased on 1 January 2011 and were scheduled to take effect until 31 December 2013. Effective 1 January 2014 the VAT rates were supposed to return to their previous lower level. Based on the information provided by the Government Information Centre (CIR), the extension of the current higher rates was caused by the need to reduce imbalances in public finances, as well as by a weak demand in major export markets. Both factors are limiting the economic growth.


On 19 December 2013, the parliament adopted amendments to the Tax Code. The initially planned decrease of the VAT standard rate to 17% has been postponed until 2015. In 2014, the VAT standard rate will remain at 20%.  On 31 December 2013 the President Viktor Yanukovych signed the amendments into law.

via January 2014 International Indirect Tax Updates – Thomson Reuters Tax & Accounting.

KEY – LiNKiT launching eBilanz-Cockpit for Germany: our integrated SAP solution

In Business Strategy, EU development, General, Processes and Controls, Tax News on 11/09/2013 at 3:22 pm

Ferry_LinkedIn KEY-GROUPThe legal requirement for the creation and submission of an electronic tax balance sheet (e-balance) in XBRL poses a major challenge for all companies located in Germany. Even though the new law is applicable as of fiscal year 2013 for most taxpayers, many ERP software providers, such as SAP, do not offer a satisfactory solution for complying with the comprehensive legal requirements.

The standard functionality of SAP supports only the data provisioning for the electronic tax balance. Separate add-ons are needed for the creation of the final XBRL file and the electronic submission. SAP’ s own ‘solution’ is called ‘SAP ERP client for E-Bilanz’ and is a local Excel Add-on application and not an integrated SAP solution. It does not work without the generic risk of interfaces.

These risks can be eliminated with as endgame the entire process fully integrated into SAP.

All our products are in SAP integrated products (without external interface) and have been implemented by major multinationals and of course client references are available.

The advantages of the eBilanz Cockpit

  • The KEY – LiNKiT eBilanz Cockpit is an easy-to-use and lean solution for the German e-balance
  • It is fully integrated into SAP, thus easily accessible while it avoids problems with generic interface risks
  • The cockpit’s ten steps process, provide an intuitive guideline for the process of creating and filing the e-balance
  • The cockpit has clever features, such as the drag & drop functionality for mapping the company’s chart of accounts to the required fiscal taxonomy, making the cockpit an user-friendly tool
  • In order to provide a comprehensive solution for the entire corporate group, the cockpit also has an interface for non-SAP systems, enabling the upload of financial data from subsidiaries not using SAP
  • All the group’s tax balances can be created in and filed from one central SAP system. Various characteristics of the cockpit ensure an audit-proof process
  • The tax adjustments made in the cockpit do not influence the regular SAP data and are tracked in a separate document journal.
  • Just as in SAP itself, all entries and changes are recorded, thus ensuring that the cockpit meets high standards of IT and process security, including a full audit trail.

Read more about  basic data flow within the cockpit, implementation plan and return on investment opportunities in slide deck below.

LiNKiT eBilanz Cockpit front

Download LiNKiT eBilanz PowerPoint

Consumption tax – Organisation for Economic Co-operation and Development

In EU development, General, Processes and Controls, Tax News on 09/08/2013 at 9:31 am

Consumption tax – Organisation for Economic Co-operation and Development

05/08/2013 – On 4 February 2013, the OECD released an invitation to comment on four new draft elements of the OECD International VAT/GST Guidelines.

The OECD has now published the comments received, which can be downloaded by clicking on the links below. The OECD is grateful to the commentators for their input.

Working Party No. 9 of the Committee on Fiscal Affairs will use the main findings to inform its work on the development of the OECD International VAT/GST Guidelines.

  1. A3F
  2. AFME
  3. BASF
  4. BBA
  5. BP
  8. CBI
  9. CFE
  10. CIOT
  11. Confederation of Swedish Enterprise
  13. EBF
  14. Ernst & Young
  15. FBF
  16. Febelfin
  17. FEE
  18. FIDAL
  19. ICAEW
  20. Insurance Europe
  21. IUA
  22. Law Society of England and Wales
  23. NFTC
  24. ODIT
  25. RISHI GAINDA (Unilever)
  26. SOFTEC
  27. SwissBanking
  28. TAXAND
  29. TEI
  30. USCIB
  31. VPG
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