BDO Indirect Tax News

• Argentina: As from 1 January 2025, VAT-taxable persons that sell goods or services to final consumers must separately indicate VAT and other indirect federal taxes relating to the transaction on the relevant invoice.
• Bahamas: The prime minister announced on 8 January 2025 that the VAT rate on food sold in stores will be reduced from 10% to 5% as from 1 April in an effort to tackle the high cost of living.
• Costa Rica: Final e-invoicing rules that apply as from 13 November 2024 include an exemption from the e-invoicing requirement for financial entities, specifically those supervised by the General Superintendency of Financial Entities that carry out financial intermediation activities (as long as such entities do not sell goods or provide VATable services) and specific guidance for certain compliance obligations.

A resolution that became effective on 6 November sets out the final framework for the automatic exchange of information regarding sellers operating through digital platforms, as well as reporting obligations for digital platform operators.

• Croatia: The government has transposed to revised special VAT scheme for SMEs into domestic law. It originally proposed to increase the VAT registration threshold to EUR 50,000, but then raised it to EUR 60,000.
• Cyprus: The zero rate of VAT, which expired on 30 September 2024, has been reintroduced on certain essential items for the period 4 November 2024 - 31 December 2025. The rate reduction aims to mitigate the cost burden on essential goods amid ongoing economic challenges in the country.
• Czech Republic: As from 2025, persons established outside the EU and that register for VAT in the Czech Republic must appoint an agent for the delivery of documents from the Czech tax authorities if they do not have an active data box used for secured electronic communications with the Czech authorities. Persons from third countries who were VAT payers in the Czech Republic before 2025 must fulfil this obligation by the end of February 2025. New VAT payers will designate their agent during the registration process. Any changes relating to the agent must be reported within 30 days. Penalties apply for noncompliance.

The law transposing the special scheme for SMEs into domestic law and revising VAT registration requirements was published on 23 December 2024. If the taxpayer’s annual turnover exceeds CZK 2 million but is below CZK 2,536,500, the taxpayer will become a VAT payer from 1 January of the following year. If the taxpayer’s turnover during the year exceeds CZK 2,536,500, it will become a VAT payer immediately, i.e., as from the day following the day on which the amount is exceeded.

• Ecuador: A law published on 10 December 2024 introduces measures to boost compliance and improve oversight of the tax authorities. The law requires resident and nonresident digital service providers to register with the tax authorities and collect 12% VAT for services provided to Ecuadorian consumers. Affected services include online streaming, software and e-learning services, with penalties imposed for noncompliance.
• Estonia: The government has transposed the revised special scheme for SMEs into domestic law and has set the VAT registration threshold at EUR 40,000.
• European Union: Changes to the EU special VAT scheme for small enterprises (SMEs) are effective as from 1 January 2025, with the main change being that the scheme now applies to cross-border transactions in the EU, rather than just domestic transactions in a member state. Under the scheme, if certain requirements are met, a taxable person established in the EU may opt for a VAT exemption in a member state other than the member state in which the SME is established. Previously, a small business could only act as a non-taxable taxable person in the member state of establishment, meaning that it was necessary to register and fulfil VAT obligations in every member state other than their place of establishment where they sold products or provided services. The SME scheme allows eligible SMEs to elect to be exempt from VAT if their annual turnover remains under a specified threshold set by each EU member state. The domestic scheme is available to businesses established in the member state where VAT is due, as long as the SME’s annual revenue does not exceed the monetary threshold set by that member state up to EUR 85,000. The cross-border scheme extends the VAT exemption to SMEs operating throughout the bloc provided the SME’s total annual turnover in the EU in the current and previous calendar year does not exceed EUR 100,000 (or the local currency equivalent).

Also effective 1 January, a new VAT reporting scheme enables the movement of own goods to be reported in a single simplified return rather than the business having to register for VAT purposes in multiple member states simply to report the movement.

The Polish Presidency of the Council of the EU, which commenced on 1 January 2025, has published its programme that sets out priorities for its six-month term.

On 3 December 2024, EU negotiators reached a compromise to delay the implementation of the EU Deforestation Regulation by one year to 30 December 2025, giving companies more time to adapt. Large operators and traders are expected to comply by the new deadline and small enterprises are granted an additional six months. The European Commission has committed to simplifying requirements for countries with sustainable forest management practices and ensuring the online compliance system is operational by December 2025. The Deforestation Regulation is designed to eliminate deforestation from EU supply chains for commodities, including beef, soy, palm oil and cocoa.

The Council of the EU reached political agreement on 10 December 2024 on a proposal to replace the hard copy version of certificates for VAT exemptions with a digital version. The European Commission will develop the certificate. The agreement must be formally adopted before it becomes effective.

• France: A decree published on 22 December 2024 and that applies as from 1 January 2025 details the new rules regarding the special VAT scheme for SMEs. The decree also sets out the information that must be provided by taxable persons established in France that wish to benefit from the VAT exemption scheme in one or more other EU member states.
• Germany: The Annual Tax Act 2024, published in the official gazette on 5 December 2024 (and that applies from the following day) transposes the special VAT scheme for SMEs into domestic law. The VAT exemption is available where the entrepreneur's EU-wide annual turnover does not exceed EUR 100,000 in the previous year or EUR 100,000 in the current year.
• Greece: The European Commission has authorised Greece to apply an e-invoicing obligation on all taxable persons established in Greece in order to combat tax fraud and evasion, simplify VAT compliance and make tax collection more efficient.
• Guinea Bissau: VAT is introduced as from 1 January 2025. A circular released on 3 December 2024 includes the announcement and provides that covered taxpayers will have compliance obligations, such as declaring the start of VAT activities, issuing standardised invoices, etc., and adhering to VAT collection and payment requirements. The VAT rate on the supply of goods and the provision of services and imports is 10% or 19% (with some exemptions) and exports are subject to a 0% rate.
• Hong Kong: As from 21 December 2024, stamp duty is waived on transfers of shares or units of real estate investment trusts (REITs) and transactions amounting to jobbing business of options market makers. A press release issued by the Inland Revenue Department on 11 December announced the new measures.
• Hungary: The tax authorities on 10 December 2024 released a summary of the special VAT exemption scheme for SMES. The new rules implement the EU directive in this area.
• Ireland: On 13 December 2024, the tax authorities released an updated eBrief that confirms the criteria and registration process to benefit from the EU special VAT scheme for SMEs.
• Latvia: The bill transposing the special scheme for SMEs into domestic law and revising VAT registration requirements was published on 28 December 2024. Latvia has set its domestic VAT registration threshold at EUR 50,000 in a calendar year (revised from EUR 50,000 in the immediately preceding 12-month period).
• Liechtenstein: E-invoicing is mandatory and paper invoices are no longer accepted as from 1 January 2025. All VAT transactions must be conducted though the “eVAT” portal of the tax authorities.
• Luxembourg: The law transposing the special scheme for SMEs into domestic law and revising VAT registration requirements was published on 23 December 2024. As from 1 January 2025, the threshold for the application of the SME scheme is increased to EUR 50 000; however, a small business that exceeds the threshold during a calendar year can still benefit from the exemption until the end of that year provided the threshold is not exceeded by more than 10%. Luxembourg businesses that want to apply for the cross-border SME scheme must inform the authorities in advance. Although eligible businesses will not have to register for VAT purposes and submit VAT returns in other EU member states for the transactions carried out there under the exemption, they will be required to declare their turnover in each EU member state on a quarterly basis.
• Malaysia: E-invoicing rules that became effective on 1 October 2024 require that invoices be issued on all transactions for the supply of goods or services by a person whose annual sales exceed MYR 100 million. The effective date for persons with annual sales exceeding MYR 25 million but less than MYR 100 million is 1 January 2025 and 1 July 2025 for all other persons.
• Poland: The law transposing the EU rules for the special tax regime for SMEs applies as from 1 January 2025. Under the new rules, small businesses in other EU member states can claim a VAT exemption if their annual turnover within the EU does not exceed EUR 100,000 and small Polish businesses whose annual domestic turnover is less than PLN 200,000 are entitled to a VAT exemption for local supplies. Exemption claims must be submitted to the e-Tax Office.
• Portugal: VAT grouping between related VAT-registered businesses is introduced as from 1 January 2025. The VAT group rules allow related business to file a single return and share the same VAT number, with the effect that intragroup transactions will be possible without VAT.
• Romania: An ordinance published on 5 December 2025 postpones the implementation of a rule that will require taxpayers to respond within 20 days to a notice issued by the tax authorities regarding discrepancies in the VAT return and the pre-filled VAT return. This measure will be delayed until 1 July 2025.
• Saudi Arabia: The Minister of Finance has extended the tax amnesty for all Saudi taxes through 30 June 2025. The decision was announced on 29 December by the tax authorities and is an extension of previous initiatives to reduce the economic and financial effects of the COVID-19 pandemic (for prior coverage, see the article in the August 2022 issue of Corporate Tax News).
• Slovenia: The government has adopted a bill that would implement the special VAT rules for SMEs into domestic law and that applies as from 1 January 2025.
• Taiwan: The Ministry of Finance has proposed to increase the VAT registration threshold for nonresident online service providers from TWD 480,000 to TWD 600,000. Further announcements are expected in February.
• Uruguay: The tax authorities announced on 28 November 2024 that taxpayers must implement the e-invoicing system by 1 January 2025, subject to specified exceptions (e.g., nonresident taxpayers).
• Vietnam: The 2% VAT rate reduction for goods and services subject to the standard rate is extended through 30 June 2025. As a result, goods and services subject to the 10% rate will continue to enjoy an 8% rate for the first six months of 2025.

Based on guidance issued 11 November 2024, organisations and individuals that sell goods via livestream sessions must register with the tax authorities and declare and pay tax.