BDO Indirect Tax News

• Anguilla: Operators of short-term accommodation to guests, regardless of the platform used (e.g., Airbnb, VRBO, etc.) are required to register under the General Sales Tax Act and obtain a valid business license, based on an announcement made by the tax authorities on 16 September 2024. Penalties will be imposed for noncompliance.
• 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 on the transaction on the relevant invoice.
• Asia Pacific: The Asia-Pacific Economic Cooperation framework (APEC) hosted the third Free Trade Area of the Asia-Pacific (FTAAP) dialogue in August, bringing together key stakeholders from member economies to discuss the future of regional trade. The dialogue focused on adapting to post-pandemic realities and the global transition towards a green and digital economy. Participants identified three primary areas for enhancing Asia-Pacific trade cooperation: (i) reducing non-tariff barriers, (ii) harmonizing digital trade regulations, and (iii) fostering sustainability through climate-friendly trade policies, goals that align with the FTAAP objective to create a more integrated and resilient trading bloc. One key takeaway was the emphasis on fostering inclusive trade policies that promote small and medium-sized enterprises (SMEs), with APEC members acknowledging that SMEs, particularly in developing economies, need better access to digital infrastructure to fully benefit from digital transformation.
• Bahamas: The tax authorities have published a bill (Value Added Tax (Amendment) Bill 2024) that would introduce a new requirement for companies and international business companies to annually declare any interest held in Bahamian real property to the Comptroller.
• Bahrain: A fixed hotel service fee known as the “hotel accommodation fee” applies as from 1 May 2024. The BHD 3 per room per day fee is incorporated into the room rates charged to tourists visiting Bahrain. The fee is collected from the guest who occupies a hotel unit, regardless of the entity that made the reservation or that is responsible for payment for the stay.
• Canada: The government announced on 1 October 2024 that it has finalised the list of Chinese-made electric vehicles (EVs) and steel and aluminium products that will be subject to new tariffs. The government announced on 26 August that a 100% tariff would be imposed on Chinese-made EVs and a 25% tariff on Chinese steel and aluminium, with the 100% tariff applying as from 1 October and the 25% tariff as from 22 October.
• Chile: Under a Tax Compliance Bill recently approved by the senate, operators of digital intermediation platforms would be considered normal VAT taxpayers. The bill still must be reviewed by the Constitutional Court and approved by the president.
• Congo (Dem Rep): The Directorate General of Taxes announced on 5 September 2024 that the first phase of the introduction of standardised VAT invoices and electronic tax systems is being launched. The initial phase targets companies based on predefined criteria, with the Directorate General hosting training sessions on the new procedures.
• Croatia: The government intends to raise the mandatory VAT registration threshold from EUR 40,000 to EUR 50,000 to help businesses that are required to register for VAT purposes because inflation brought them within the scope of VAT.
• Dominican Republic: The president announced a comprehensive tax modernisation project on 7 October that would add digital services to the list of VAT taxable services.
• Ecuador: The standard VAT rate increased from 12% to 15% on 1 April 2024.
• Estonia: On 1 January 2025, the VAT rate on accommodation services will increase from 9% to 13% and the rate for press publications will rise from 5% to 9%, subject to certain transition rules. Additionally, the new government has proposed to increase the standard VAT rate from 22% to 24% as from 1 July 2025.
• European Union: On 3 October 2024, the European Commission formally launched an anti-subsidy investigation into the imports of battery electric vehicles (BEV) from China. The investigation will examine whether BEV value chains in China benefit from illegal subsidisation and whether that causes or threatens to cause economic injury to EU BEV producers. If this is determined to be the case, the likely consequences and impact of measures on importers, users and consumers of BEVs in the EU will be examined. The Commission will establish whether it is in the EU's interest to remedy the effects of the unfair trade practices found by imposing anti-subsidy duties on imports of BEV imports. The tariffs would be up to 35.3% in addition to the existing 10% duty.

As from 1 October 2024, the EU General Court can issue preliminary rulings in cases involving the EU VAT system as a result of an expansion of the court’s jurisdiction (announced in August). The press release issued by the Court of Justice of the European Union (CJEU) states that preliminary ruling requests will continue to be submitted to the CJEU, which will conduct a preliminary analysis of the case; requests that are exclusively within one or more specific areas will be transferred to the General Court. In addition to VAT cases, the General Court will make preliminary rulings in cases involving the EU customs code, tariff classification of goods, excise duties, compensation and other assistance for transportation passengers in designated cases, and the greenhouse gas emissions allowance trading system.

Discussion on VAT in the Digital Age or ViDA has been postponed to November (for prior coverage, see the article in the July 2024 issue of Indirect Tax News). ViDA will introduce e-invoicing, single VAT registration and new tax rules for the EU platform economy. The EU member states met on 26 September 2024 where Estonia—the only member state that has not agreed to the plan—presented amendments to the bill. Estonia’s objections to the platform economy measures stem from its perception that ViDA would burden Estonian SMEs with additional tax.  

On 25 September, the EU formally requested consultations with China at the WTO (the first step in the WTO’s dispute settlement system) concerning China’s initiation of an anti-subsidy investigation on certain dairy products imported from the EU.

• Greece: A bill enacted on 16 September 2024 abolishes stamp duty and replaces it with a digital transaction fee that applies to a broad range of transactions engaged in by Greek residents or permanent establishments of nonresidents. The scope of the digital transaction fee includes loans, deposits, compensation, the sale of movable property and intangibles, etc., as well as certain transactions with the government. The fee will apply to acts, contracts and transactions concluded or carried out as from 1 December 2024.
• Hong Kong: On 22 April, new rules banning many single-use plastics (with limited exceptions for plastics used for medical procedures and medicines, etc.) became effective, with penalties for noncompliance. The ban on single-use plastics marks a significant shift toward sustainability in supply chains, particularly in the food and beverage industry and the move is part of a broader effort to reduce nonbiodegradable plastics and encourage businesses to adopt more sustainable packaging practices.
• Iceland: The 2025 budget bill presented on 10 September 2024 includes a proposal to introduce a cultural contribution that would require streaming service providers to pay a maximum of 5% of their annual Iceland-sourced subscription fees or directly invest in the production of domestic audio and video. An exemption from the contribution would be granted to streaming providers that meet the minimum investment in the production of Icelandic material. If the budget is approved, the new contribution would apply as from 2025.
• India: In a circular released on 10 September, the Central Board of Indirect Taxes and Customs clarify that the place of supply for data hosting services provided by service providers in India to foreign cloud computing service providers is the place where the recipient of the services is located, with the result that such services will be deemed an export of services.
• Ireland: The budget for 2025 presented by the Minister for Finance on 1 October 2024 includes a proposal to increase the carbon tax rates from EUR 56 to EUR 63.50 per tonne as from 9 October 2024 (for an analysis of all of the indirect tax proposals in the budget, see the tax alert prepared by BDO in Ireland).
• Italy: A decree published on 10 September 2024 and that applies as from 25 September implements the EU corporate sustainability reporting directive into domestic law. The decree includes new reporting obligations relating to social and environmental information and an extension of the reporting requirements to encompass SMEs.
• Latvia: The application of the reduced 12% VAT rate (due to expire at the end of 2024) to supplies of certain fruits and vegetables is proposed to be extended through 31 December 2028.
• 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.
• Nepal: The tax authorities published updates to the Digital Service Tax Act on 23 August 2024, which imposes a 2% tax on the value of digital services provided by nonresidents (for prior coverage, see the item in the Bytes column in the August 2022 issue of Indirect Tax News). The threshold for falling within the scope of the DST is increased from NPR 2 million to NPR 3 million. The DST applies separately from the 13% VAT on the provision of digital services, which nonresidents are required to charge and collect.
• New Zealand: The International Visitor Conservation and Tourism Levy increased from NZD 35 to NZD 100 on 1 October 2024 to ensure that visitors contribute to public services and high-quality experiences while visiting New Zealand. The hike was announced in a press release issued on 3 September 2024.
• Nigeria: As from 9 September 2024, a one-time NGN 50 electronic money transfer levy applies to electronic receipts or transfers of NGN 10,000 and more received by bank customers (the exchange rate set by the Central Bank will be used for receipts/transfers made in another currency).
• Peru: Based on a legislative decree that applies as from 14 September 2024, gaming and sports betting by Peruvian residents using nonresident digital platforms is subject to a 1% excise duty, with the nonresident acting as the collection agent of the duty. Additionally, both resident and nonresident entities engaging in remote gaming and sports betting via digital platforms in Peru as subject to a 12% tax on net revenue generated from such activities.
• Philippines: The president signed a bill into law on 2 October that introduces a 12% VAT on digital transactions involving nonresident digital service providers, such as streaming services and online search engines (for prior coverage, see the item in the Bytes column in the April 2024 issue of Indirect Tax News). 
• Romania: An order published on 3 September 2024 sets out the layout and content of the RO e-VAT compliance notice, along with the related transmittal procedure (for prior coverage, see the item in the Bytes column in the April 2024 issue of Indirect Tax News).
• Slovak Republic: Parliament approved a package of measures on 3 October 2024 that include an increase in the standard VAT rate from 20% to 23% and the introduction of an additional reduced VAT rate of 19% to the existing reduced VAT rates of 10% and 5%. If the bill is signed by the president, the rate changes would apply as from 2025.
• Thailand: Royal decrees published on 24 September 2024 grant a VAT exemption for the sale of cryptocurrency and utility tokens through licensed digital exchanges and extend the exemption to sales made through licensed brokers and dealers, effective from 1 January 2024.

A royal decree released on 20 September 2024 extends the application of the 7% reduced VAT rate (rather than the standard 10% rate) for an additional year to 30 September 2025.

The “Thailand-EU Comprehensive Partnership and Cooperation Agreement (PCA) approved by parliament on 29 August 2024 aims to foster a closer and more strategic partnership and expanded cooperation in various sectors and will enhance trade and investment opportunities between Thailand and the EU, particularly by expediting negotiations for a free trade agreement, enabling access to best practice standards and enhancing competitiveness. The PCA is the first bilateral agreement between the EU and Thailand and supersedes the legal framework of the 1980 Cooperation Agreement between the European Economic Community and the Association of South-East Asian Nations member countries.

• Ukraine: The government is drafting legislation that would abolish the VAT and customs duty exemption threshold of EUR 150 for online purchases. If enacted, all purchases made online via foreign web sites would be subject to VAT and customs duties regardless of their value.

Taxpayers falling within the scope of the simplified tax regime that are not VAT-registered and that import goods into Ukraine must pay VAT at the time the goods clear customs.

• United Kingdom: The most recent Guidelines for Compliance (GFC8) on VAT compliance published by the tax authorities (HMRC) on 18 September 2024 impact all taxpayers and set out HMRC’s expectations and best practices for the VAT compliance process. The guidelines go a significant step beyond Making Tax Digital and make clear the requirement for businesses to assess their processes and controls for all upstream areas of finance that affect VAT compliance. This means starting at the beginning with customer and supplier onboarding and tracing through the accounts receivable and accounts payable processes, including procurement and employee expenses. There is an expectation that businesses understand all of the data sources impacting the VAT return and are comfortable that the relevant systems from which VAT data is ‘pulled’ are reliable and that there are sufficient VAT controls in place. 
• United Nations: Some 90 WTO members (out of 164), representing 90% of global trade, have been negotiating an agreement on e-commerce under what has been labelled a “Joint Statement Initiative” (JSI). In late July, the participants produced a “stabilised text.” This indicates that the text is not a finalised agreement, but the co-convenors of the JSI (Australia, Japan and Singapore) do not expect fundamental changes. Nine of the participants (including Brazil, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Türkiye and the US) have not (or not yet) associated themselves with the stabilised text due to ongoing domestic consultations. The text contains useful provisions on e-commerce facilitation (e.g., e-signatures, contracts, invoicing and payments) and consumer protection and prohibits the imposition of customs duties on electronic transmissions, including the content of such transmissions, subject to a review after five years. 
• United States-Canada: On 30 August, the US announced it had requested dispute settlement consultations with Canada concerning the introduction of a digital services tax (DST) in Canada on 20 June 2024 (for prior coverage, see the article in the July 2024 issue of Indirect Tax News). Canada’s DST appears to be inconsistent with its commitments under provisions in the United States-Mexico-Canada Agreement that U.S. businesses should not be treated less favourably than Canadian businesses.
• United States-Vietnam: On 2 August, the US Department of Commerce announced its determination that Vietnam will continue to be classified as a non-market economy (NME) country for purposes of calculating US anti-dumping duties on imports from Vietnam. As a result, the methodology used in calculating US anti-dumping duties on imports from Vietnam remains unchanged.
• Vietnam: The 8% VAT rate has been extended to the end of 2024, subject to certain exceptions.

World Trade Organisation: On 23 September, the WTO’s Dispute Settlement Body agreed to the establishment of a panel, at China’s second request, to determine whether certain tax credits under the US Inflation Reduction Act (IRA) are in line with WTO rules. China alleges says that the IRA’s subsidies favour domestic goods over imports, violating WTO rules prohibiting such discrimination. A number of countries have flagged their intention to participate as third parties in the proceedings. Under the WTO’s dispute settlement system, a panel is established automatically upon a complainant’s second request. The panel will likely take a year or more to issue its report.