Kreston Global indirect tax experts share insight in Taxation Magazine
August 18, 2022
The management of indirect taxes can be a challenge due to constant global change and the wide range of systems in countries and regions. This impacts UK businesses trading overseas financially. Compliance is a key issue, with tax authorities reaching beyond borders to exchange information. Our indirect tax experts recently shared the global themes they consider to be significant to businesses with Taxation Magazine. Here is a summary of their key points;
European indirect tax themes
European Director for the Kreston Global Indirect Tax Group Eduard Pavel, comments
“Since Romania joined the EU in 2007 it has applied the EU VAT Directive. However, there are some specific local differences, which are worth noting by non-established UK companies planning to do business in Romania. Tax registrations in Romania require non-established companies to have a fiscal representative to take full responsibility for VAT, resulting in a significant increase in the cost of the registration and in the representative requesting guarantees as a result of the risk it bears.”
Will this result in the EU becoming more proactive in enforcing VAT registrations for non-established businesses? The nexus rule in the US states could also catch more UK businesses selling into the US. Understanding the implications of the tax rules, wherever a business chooses to trade can avoid unexpected retrospective tax payments and penalties.
Other key themes;
European e-invoicing rules
Bridging the VAT gap by introducing systems to reduce errors, avoidance or evasion is another key theme.
We are also seeing countries looking to benefit from free trade agreements (FTAs), with particular relevance to the UK
United States indirect tax themes
Economic nexus rules were recently altered by the US Supreme Court. Nexus refers to a sufficient connection between the state and business that affords the state jurisdiction to require the business to collect tax. The court imposed a collection obligation on any seller that exceeded 200 transactions or $100,000 US of in-state sales.
US Director for the Kreston Global Indirect Tax Group Geoff Christian and managing director, CBIZ MHM comments;
Over the past four years, many foreign businesses have found it much more challenging to sell in the US. Unlike the UK and Europe, which impose a VAT, the US imposes a sales and use tax in consideration of most, but not all, states and localities on the sale of tangible personal property or certain taxable services.
India’s indirect tax themes
Ganesh Ramaswamy, international tax spokesperson at Kreston Global and partner at Kreston Rangamani comments;
In India, there are four slab rates for goods and services tax (GST): 5%, 12%, 18% and 28%. The GST Council, the statutory body deciding on GST rates and which comprises members from all the states of India, wants to create a new slab rate and move items into higher sales tax brackets, which may impact businesses that trade in India. Due to inflationary pressure, the government of India has now decided to defer, however, it is an issue to keep an eye on.
Global indirect tax themes summary
The crackdown by tax authorities on VAT revenue is widespread and growing. It is imperative for a UK business to understand the compliance obligations when trading overseas in order to avoid penalties. For more indirect tax advice and to read the full article click the link here.
Why Kreston Global?
We can help you to be compliant and can provide you with advice on innovative solutions to facilitate trade. We very much work collaboratively amongst our network of experienced professionals and with our direct tax colleagues too as there is often a need to think about a number of taxes when solving issues. This approach offers you the best tailored ‘tax’ advisory and compliance service. Therefore, whether you are a single organisation that is established within one country and need local advice concerning indirect tax issues or, at the other end of the scale, a global group that wants a coordinated team of advisers to support the management of VAT and other taxes in multiple jurisdictions, we can help you in offering a one-stop-shop.
We can advise on:
• VAT and GST
• Sales Tax, Use Tax
• Customs Duties
• Other indirect taxes, such as Stamp Duty
We have indirect tax specialists in our Kreston Global network of firms that are present in 120 countries around the world. We would be delighted to discuss your business issues and requirements.