Indirect Tax 2013

Indirect tax in 2013
A review of global indirect tax

developments and issues
Indirect Tax in 2013 1

Our thoughts on
indirect
taxation
in 2013
Philip Robinson
Global Director — Indirect Tax
Tel: +41 58 289 3197
Email: [email protected]
2 Indirect Tax in 2013

Welcome to Indirect tax in 2013.
We hope you find this publication useful
for your business.
This is our fourth annual roundup of developments in value- Indirect tax in 2013 provides a high-level overview of
added tax (VAT), goods and services tax (GST), excise duties, significant developments in indirect taxation, but it is not
customs duties and other indirect taxes around the world. We an exhaustive list. This is a rapidly changing area of taxation.
present changes that have been introduced recently or that Please be aware that there may be other changes not listed
are expected in the coming year in more than 100 countries; in this publication that may have an impact on your
we also provide four summary maps to give a “snapshot” business. Detailed information about developments in
of where the changes are taking place. And, once again, indirect taxes may be found at ey.com and through our
we examine the changes we are seeing around the world in regularly updated eVA information service, The Worldwide
more detail to identify key trends and their implications for VAT, GST and Sales Guide and in our regular magazine,
global businesses. Indirect Tax Briefing.
This year already looks set to be another challenging year If you would like to discuss developments in indirect tax, or
for indirect taxes — and for you if you are responsible for if you would like access to our eVA service or copies of our
managing them for your organization. Globalization and the publications, please contact one of the Ernst & Young Indirect
spread of advanced technologies continue to increase the Tax leaders listed in this report, or your usual Ernst & Young
levels of cross-border trade in goods and services — and to Indirect Tax contact.
present opportunities and difficulties for taxpayers and tax
administrations. In the past, it was sufficient to keep abreast
Best regards,
of in-country developments; now, you must be aware of
what is happening all over the world. Ensuring the detailed
changes are reflected in your accounting and reporting
systems is an ongoing, difficult task — as the sheer number
of indirect tax changes in this report indicates! But it is also
important to keep the bigger picture in mind: what does the
Philip Robinson
shift toward indirect taxation mean for your overall tax and Global Director — Indirect Tax
business strategy? What do these developments mean for
your organization?
As you read this report and our overview article, you may
want to keep these questions in mind: which developments
impact us most? Who needs to be aware of these changes?
What actions do we need to take? What impact might these
developments have on our future plans?

Co

ontents
With change comes
complexity 6
1
Five key trends in indirect tax 8
VAT/GST 18
VAT/GST rate changes map 20
Other VAT/GST changes map 22
Countries 24
2Excise and other

indirect taxes 72
Excise and other taxes map
Countries
74
76
3Customs duty
and international
trade 94
Free trade agreements
Significant country
developments 2012–13
Customs duty
and international trade map —
Free trade agreement
96
97
114 Indirect Tax in 2013 5

With change
comes complexity
The sheer number and variety
of changes in indirect taxes in
recent years and the challenge of
implementing them into accounting
and reporting systems can be
overwhelming — making it hard to
keep sight of the bigger, strategic
picture. But what do all these
changes add up to? Do common
Claudio Fischer
Tel: +41 58 286 3433
themes emerge? What changes can
Email: [email protected]
we expect in the future?

The “tax mix” is shifting toward
taxes on consumption
It is probably unprecedented in the and services — consisting primarily of

long history of taxes that a specific tax excise taxes, customs duties and certain
mechanism, such as value-added tax special taxes — form the other important
(VAT), has spread around the world in less leg of indirect taxes. The unweighted
than a half century. Limited to less than average of revenue from the five broad
10 countries in the late 1960s, VAT — or, categories of taxes as a percentage of
in several countries, goods and services overall taxation in the Organisation for
tax (GST) — is today an essential source Economic Co-operation and Development
of revenue in more than 150. Despite (OECD) member countries indicates that
its importance, VAT/GST is not the only the proportion of indirect taxes make up
indirect tax. Taxes on specific goods about one-third of the total (Figure 1).
Figure 1. Tax structures in the OECD area1
35
30
25
20
15
10
1965 1975 1985 1995 2005 2009
Personal Corporate Social security General consumption Specific consumption

income tax income tax contributions taxes taxes
Source: OECD Tax Database
1. Percentage share of major tax categories in total tax revenue.
We believe that the importance of indirect imply government will continue the shift
taxes will continue to grow. The economic from direct to indirect taxes, which are
crisis has caused many governments to less harmful for growth, look to improve
find sustainable ways to rebalance their the efficiency of indirect taxes and take
budgets and stimulate growth. This would action to combat tax fraud and avoidance.

What is driving this change?
We have identified five key trends in
indirect taxation that we believe will be
significant for international businesses
in 2013 and beyond:
1. VAT/GST rates are increasing.

2. Excise duties are on the rise
again.
3. Free trade is increasing
but is meeting protectionist
challenges.
4. Indirect tax systems are
becoming more efficient.
5. Tax administrations are
focusing on compliance and
enforcement.
Let’s consider each of these trends in
detail and look at which regions of the
world are most affected by each.

12345
Increasing VAT/GST rates
Around the world, many countries are Broader base

relying more and more on indirect taxes
to finance their budgets. Coupled with the The scope of VAT/GST is also widening
ongoing economic crisis, VAT/GST rates in many countries. This is being achieved
have increased impressively in recent through the “reclassification” of certain
years as a result; at the same time, the goods or services to apply a different rate
scope of VAT has broadened in many and by removing exemptions. Examples
countries. of countries where the scope of the
zero-rate (0% rate) was reduced in 2013
The trend in rising VAT rates has been include Croatia, Norway and Kenya; while
particularly strong in Europe, especially in the Dominican Republic, Jamaica, and
in the European Union (EU), where, as Zambia, exemptions have been removed,
a result of the consistent rises, between and in Iceland, Italy and Poland, the
2008 and 2012 the average EU standard application of the standard rate has been
VAT rate increased from around 19.5% widened to goods that were previously
to more than 21% (Figure 2, p10). The taxed at reduced rates.
upward rate trend in Europe continues
as Cyprus, the Czech Republic, France, The impact on business
Finland, Italy, Poland and Slovenia have The significance of this trend for final
already increased rates recently or have consumers is clear: retail prices rise.
announced increases later in 2013 But its impact on businesses is equally
and 2014. important: higher VAT/GST rates
In Asia-Pacific, the upward VAT/GST rate increase the compliance risk. Companies
trend is less explicit, but still noticeable. must ensure that all the increases are
Japan, for example, which is struggling properly dealt with in their accounting
with massive budget deficits, decided in and reporting systems, which often
August 2012 to increase the current VAT results in a range of IT and administrative
rate from 5% to 8% effective 1 April 2014 costs. Errors frequently arise when
and to 10% effective 1 October 2015. rates change, resulting, for example,
Thailand has also announced a rise from incorrect product or tax codings
in the VAT rate from 7% to 10%, to happen or confusion about the correct rate for
by October 2014. supplies that span the change. More
generally, rate increases mean the
By contrast, VAT/GST rates in the amount of VAT/GST “under management”
Americas remain relatively stable. In also increases, as do penalties for errors
South America, where VAT systems are that are based on the amount of tax
widespread and have been in use for payable.
some time, rates have not changed much
in recent years. One exception is in the
Dominican Republic, where the rate is set
to increase from 16% to 18% this year and
next year.
Higher VAT/GST rates

increase compliance risk
Figure 2. Average VAT rates in the EU and OECD
22
21.5
21
Average standard VAT rate (%)
20.5
20
19.5
19
18.5
18
17.5
17
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
EU OECD
12345
Rising excise duties
The percentage of government revenues Americas, Aruba, Canada, Costa Rica and
received from excise duties has seen Mexico have also raised taxes on alcohol
a constant decline over recent years or tobacco, as have Fiji, New Zealand and
(Figure 1). However, this development the Philippines in Asia-Pacific.
has now slowed down and we might see
a turn in the opposite direction as excise Influencing consumers
rates are rising and new duties are being While the main purpose for excise duty
introduced. rate increases — and the original reason
In Europe, in particular, all three for the introduction of excise duties — is
important groups of “classic” excise to raise revenue, these taxes are also
duties (alcohol, tobacco and mineral increasingly being used to discourage
oils) have seen significant increases, consumption of certain products
with the only decrease in fuel excise considered to be harmful, thus influencing
duties implemented in Slovenia in 2012. consumer behavior in a number of areas.
This year, excise duties on tobacco and/ A relatively new trend is the introduction
or alcohol have increased or will soon of excise taxes on health-related products
increase in most EU countries, Guernsey, (other than alcoholic beverages and
Moldova, Norway and Switzerland. This tobacco products) such as snack taxes
trend can also be seen in other parts of on “unhealthy” food. For example, Benin,
the world; in Africa higher excise duties Costa Rica, Norway and the Philippines
are being imposed on these items, e.g., have all increased excise duties on soft
in Benin, Gambia and Zimbabwe. In the drinks, Finland has introduced an excise

Environmental issues have played
an increasing role in determining the
nature and application of taxes
duty on sweets and ice cream, and in Taxing financial transactions

France a specific contribution has been
introduced on suppliers of beverages Finally, there is a noticeable trend toward
(sodas) with added sugar or sweeteners. increasing the tax burden on financial
transactions. Although there seems to be
Over the last decade, environmental a common and widespread belief among
issues have also played an increasing countries that the financial sector should
role in determining the nature and contribute its fair share in remedying the
application of taxes, e.g., on road fuel, damage arising from the financial crisis,
motor vehicles and CO2 emissions. This there is no common approach as to how
type of measure includes tackling issues this should be achieved. Some countries
such as waste disposal, water pollution have increased supervision of the industry
and air emissions. With support from and tightened regulations. However,
the OECD, whose analysis seems to in Europe, in particular, the preferred
confirm the advantages of environmental approach has been to levy taxes on
taxes,2 many countries are introducing financial transactions. France introduced
or increasing such taxes. For example, a financial transactions tax in August
Germany has introduced a tax on 2012, and on 1 January 2013, Hungary
nuclear fuel, Austria and Germany have introduced a tax of 0.1% on the amount
introduced a duty on airline tickets for involved in any payment service. Italy will
airplanes leaving from domestic airports, follow in March 2013 with a tax on the
Ireland has introduced a tax on CO2 transfer of shares and derivatives and
emissions and South Africa is currently high-frequency trading. In addition, 11 EU
working on a framework for a carbon tax member states have agreed to introduce a
for which legislation is expected in the common transaction tax on the exchange
latter half of 2013. of shares and bonds and on derivative
contracts, which could be introduced as
early as 2014.
12345
Free trade increases but is meeting protectionist challenges
Customs duties were once a primary The WTO currently has 158 members
source of revenue for most countries. But (the most recent, Laos joined at the
continuously growing global trade and start of February 2013) and it reports
the efforts of organizations such as the 546 active and pending reciprocal
World Trade Organization (WTO) have led regional trade agreements among its
to a constant reduction in customs duties members. This number does not include
around the world. This trend continues unilateral preference programs, that is,
around the world as countries continue trade preferences granted to products
to conclude a growing network of various imported from identified countries
kinds of trade agreements. without reciprocal benefit, such as the
Generalized System of Preferences (GSP)
in the EU and the US, which provide duty-
free treatment to many products from
developing nations.
2. Environmental Taxation, A guide for Policy Makers, available at http://www.oecd.org/greengrowth/

environmentalpolicytoolsandevaluation/48164926.pdf

Non-tariff barriers have
grown substantially in
recent years
A number of new free trade agreements businesses are not actually obtaining the
(FTAs) are expected to enter into force in potential benefits offered because they
2013, thus further reducing the amount cannot or do not meet the qualifying
of customs duties imposed on global conditions.
trade; examples include the agreement
involving the EU and Peru and Colombia, Protectionism
Montenegro and the European Free More generally, global trade may be
Trade Association, and Hong Kong with hampered by the current economic
the European Free Trade Association, climate, which is encouraging
and Indonesia and Pakistan. Nearing protectionist tendencies, as evidenced
completion are, among others, the trade by the current difficulties encountered
agreements between Costa Rica and in the Doha Rounds. Non-tariff barriers
Peru and between Canada and India, have grown substantially in recent years,
and negotiations are in various stages of many in the form of health, safety or
completion for a range of others. environmental requirements. The WTO
reported 184 new trade-restrictive
Duties still a significant source
measures enacted between October 2010
of revenue and cost and April 2011 and 182 between October
However, the situation is not always 2011 and May 2012.
that straightforward. Although customs In addition, where countries are not
duty rates are generally reducing for bound by FTAs, import duties are still a
international trade, these taxes still play a common and often-used means to steer
very significant role in meeting countries’ trade and production. For example, to
budgetary needs. In many cases, duty boost the development of sugar cane
rates on many goods and materials production toward meeting the raw
remain high. sugar needs of domestic sugar refining
Unlike VAT/GST, duties charged at one companies, effective 1 January 2013
stage in the supply chain are not offset Nigeria now applies a 0% import duty on
against taxes due at later stages, so machinery for local sugar manufacturing
duties form part of the cost base of industries, but it has increased the total
affected goods. In addition, customs tariff on imported refined sugar to 80%
clearance procedures can add to the time from 35%, and raw sugar tariffs increased
and related costs of moving goods cross- from 5% to 60%.
border. And even where FTAs exist, many
12345
Making indirect tax systems more efficient
Applying higher rates is just one way to standing VAT systems need to adapt to
increase indirect tax revenues; others the demands of a 21st century digital
include broadening the tax base of an economy. In emerging markets, which
existing VAT/GST system, increasing the are experiencing economic developments
efficiency of the tax system or improving at a fast pace, indirect tax systems
compliance and enforcement. need to adapt to keep pace. In India,
for example, a new nationwide GST is
Changing law and practice ready to be implemented and only awaits
Many countries are currently in the agreement between the central and state
process of refining their indirect tax governments. The new Indian system is
systems. In developed markets, long- intended to replace almost all existing

Almost 95% of countries
surveyed have “mandatory”
or “optional” e-filing
indirect taxes levied at the state and a framework. This initiative gained
national levels, minimize exemptions and momentum following the OECD’s Global
do away with the current multiplicity of Forum on VAT, held in November 2012.
taxes. Similarly, China is in the process The forum brought together more
of replacing its current business tax than 85 country delegations from all
on services with a broader-based VAT continents together with international
through a series of VAT pilots. In the end, organizations, academics and businesses
it is intended to amalgamate all forms of to explore key policy trends and their
China’s turnover taxes into the VAT. impact for tax administrations and
businesses.
In the EU, the European Commission has
launched a comprehensive reform of the Improving tax administration
existing VAT system. The Commission has
identified no fewer than 26 priority areas Finally, governments have discovered
for further action in the coming years. that also on the administrative side, the
The aim is to move to a more modern VAT efficiency of VAT/GST systems can be
system, which should be simpler, more drastically improved — which increases
efficient and more robust. Significant tax revenues. There are many approaches
changes can be expected in the near taken by governments, but an important
future, such as the adoption of a one- one is to create common interfaces
stop-shop registration for all taxpayers’ and reduce gaps in the system. This is
duties or a standardized EU VAT return. (among others) one reason why many
governments are enforcing the use of
The United States (US) is still far from electronic data transmission and filing.
implementing a federal VAT. Currently,
states apply their own consumption taxes, Figure 3. Electronic filing of VAT/GST returns
most of which are single-stage taxes on
the sale of goods. But, even in the US, a
trend can be seen toward states extending
35%
the scope of their current sales taxes.
While sales taxes, by definition, only apply 8%
to purchases of physical goods, it is the
Mandatory
market in electronically supplied services
(such as digital music distribution, Optional
internet downloads or telecom services), Not available

which is growing fastest. An increasing
number of states are, therefore, trying
to expand their current sales tax to cover
electronic goods and services or are
57%
trying to create a “nexus” for out-of-state
vendors to constrain sellers to collect
sales taxes on remote sales.
In December 2012, we conducted a
With more than 150 countries now survey of Ernst & Young Indirect Tax
operating a VAT/GST system and professionals in 39 countries and asked
international trade still growing, it is them about indirect tax compliance
becoming more important than ever requirements.3 Twenty-five, of the 39
to provide a global framework for a countries surveyed require VAT/GST
consistent interaction of all these different returns to be filed electronically on a
systems. For a number of years, the mandatory basis, 12 states have an
OECD has been working on developing optional electronic filing (e-filing) facility
international VAT/GST guidelines, and just two countries do not offer or
which could provide the basis for such require e-filing (Figure 3).
3 . The survey included the following countries: Australia, Austria, Belarus, Brazil, Canada, Chile, China, Cyprus,
Czech Republic, Denmark, Egypt, Finland, Germany, Greece, India, Indonesia, Italy, Kazakhstan, Latvia, Malta,
Moldova, Morocco, New Zealand, Norway, Pakistan, Peru, Portugal, Romania, Russia, Singapore, Slovakia,
Slovenia, South Korea, Spain, Sweden, Switzerland, Tunisia, Turkey, Ukraine.

The impact on business Most taxpayers can also benefit from
increased efficiencies arising from
The reason for this trend is clear: e-filing e-filing, but dealing with multiple tax
considerably eases processing of VAT/ administrations’ different requirements
GST returns for tax administrations and and tax administrations’ increased audit
makes administration faster and more capacities means that greater focus must
efficient. In addition, having electronic be given to the accuracy and efficiency of
data enables tax administrations to use indirect tax compliance processes to avoid
IT-based audit tools more easily, which an increased risk of incurring penalties.
can help to combat fraud and evasion.
12345
Increased focus on enforcement
The growing importance of indirect taxes As a consequence, tax administrations in

to governments places more pressure on all parts of the world are putting a greater
tax administrations to enforce compliance. focus on indirect tax compliance and
This focus is leading to greater scrutiny of enforcement.
taxpayers’ affairs through more frequent
Our recent survey of Indirect Tax
and more effective tax audits and greater
professionals in 39 countries indicates
consequences for errors.
that, in the large majority of countries,
Audits and exchange of the number of tax audits has increased
in recent years and is likely to increase
information
further in the future (Figure 4). Only
In Europe, where VAT rates are highest, six countries reported that audits had
high-profile cases of missing trader decreased; even then, in some cases,
or carousel fraud, involving organized while the number of audits carried out
criminal gangs exploiting how VAT was said to be lower, the amount of
applies to cross-border trade, have additional tax levied due to tax audits
shown that VAT systems are vulnerable is still increasing. This finding seems
to such attacks and they have alerted contradictory, but it can perhaps be
governments to the need for vigilance. explained by tax administrations carrying
Figure 4. N
umber of VAT audits in the out more targeted audits; 24 out of the
last 3 years 39 countries already use specialized IT
tools such as audit software to detect
irregularities or suspicious patterns in
18% taxpayers’ tax returns.
In our survey 16 countries indicated
that the tax administration exchange
17%
Increased information about taxpayers’ VAT affairs
with other countries. These countries
Decreased
are mainly found in the EU, where
Stayed the same the common VAT system requires an
extensive information exchange. On a
65% global scale, the multilateral Convention
on Mutual Administrative Assistance
in Tax Matters, which is open to all
interested countries, facilitates exchange

More than 70% of countries
surveyed report VAT/GST
penalties are increasing
Figure 5. M
ost frequent reasons for tax issues. Tax administrations increasingly
adjustments apply a strictly formal approach not
considering specific economic and
business issues. This is bad news for all
“honest” businesses, which want to be
compliant, even more so as our survey
23%
16% shows that formal mistakes (e.g., missing
information on invoices) are still by far
41% the most frequent reason for indirect
10%
tax adjustments, be it an additional tax
charge or the denial of input tax recovery
10%
(Figure 5). In addition, we observe a
tendency for tax administrations to pay
out input tax surpluses with increasing
Formal mistakes (e.g., missing or incomplete invoices, receipts) delay — if at all — or to reject an input tax
Incorrect qualification of turnover (e.g., incorrect tax rate, � claim based on bad faith, stating that
exempt instead of taxable)
the claimant should have known that his
Incorrect calculation of input VAT pro-rata supplier did not correctly handle the tax.
Inconsistencies between declared VAT and annual
financial statements Figure 6. R
isk of penalties
Other
of information on all compulsory
payments to the general government
except for customs duties.4 In the last two 20%
years, more than 50 countries have either
become signatories to the convention or
have stated their intention to do so. This 8% Increased
will lead, without doubt, to increased Decreased
international cooperation. But, even if 72%
countries do not (yet) share information, Stayed the same
they increasingly exchange information
internally, between different authorities
and departments (e.g., with customs or
social security authorities). Only four out
of the 39 countries we surveyed do not
share any information at all.
At the same time, many countries are
Targeting fraud but hitting applying stricter penalty regimes in the
“honest” taxpayers too? case of non-compliance and mistakes.
In our survey, 27 of the 39 countries
There is nothing to be said against
reported that penalties are increasing,
stricter compliance enforcement if it
and only three saw a decrease (Figure 6).
actually helps to fight fraud. Fraudulent
Fines are generally imposed faster and
behavior damages the overall economy
sooner and the fines are higher than in
and tax compliant businesses, which
the past. Increasingly, fines are enforced
suffer competitive disadvantages. The
for timing issues, such as late payment,
other side of the coin, however, is that
where in the past tax administrations
tax administrations have generally
were more lenient on these issues (for
become more wary toward all taxpayers;
example, Austria, Germany, Pakistan and
they are less open to entering into
New Zealand).
discussion, and it is more difficult to
reach mutual agreement on specific
4. www.oecd.org/ctp/eoi/mutual

What should taxpayers do?
The indirect tax trends identified in this not recover VAT/GST in full (e.g., because
article are not new. But it is precisely of VAT exempt activity) such as banks
their continuing existence that indicates and insurance companies. But higher
that they are important and long-term rates also have an increased cost or cash
developments. All of these trends, be it flow impact on companies that incur
higher rates, changes in the VAT/GST VAT/GST in foreign jurisdictions, which
system or improvements in the way is not refunded quickly or, which they
authorities administer the taxes, have a do not or cannot recover (e.g., because
direct impact on businesses, which need of an absence of refund schemes for
to keep abreast of these changes. non-residents or because of complicated
refund procedures).
Indirect taxes are not easy to manage.For
example, excise duties, such as carbon As indirect tax administrations are turning
taxes, change quickly and represent increased attention to enforcement —
a high compliance risk because they including joint audits with other taxes
typically operate differently in each and even other countries — these
country. Taxpayers who collect VAT/ activities may disrupt business activity.
GST from final consumers on behalf of Large assessments for underpaid tax or
the state run increased risks of carrying penalties for late filings not only have an
the tax burden and eventual penalties impact on profitability, they may draw
themselves if they do not correctly unwanted adverse publicity, even for
manage the tax. compliant businesses.
With tax administrations assessing taxes More than ever, it pays to proactively
more thoroughly and using powerful and manage indirect taxes. Establishing a
efficient tools, the chance that mistakes clear indirect tax strategy aligned to your
will be found has risen considerably overall business strategy will help you
and will remain high. Also, as indirect keep your business up to date with the
tax rates increase, the consequences of rapidly changing tax environment and
mistakes become more severe. This is avoid additional costs and risks of poor
particularly true for businesses that do compliance or missed opportunities.

Indirect tax management —
more crucial than ever
• Consider how indirect taxes • Use advanced technology (ERP
align to your corporate strategy systems, automated diagnostic
tools)
• Formulate and establish indirect
tax management and reporting • Streamline reporting and
structures accounting systems used within
the company
• Assign high-level responsibility
for indirect taxes (e.g., by • Assure proper documentation
appointing a VAT Director) and archiving of all relevant
transactions
• Clearly allocate responsibilities
between tax, finance, IT, • Proactively identify potential
logistics and the business units issues and seek clarification
• Map all business flows and • Adopt appropriate key
analyze their indirect tax impact performance indicators to
monitor compliance and
• Analyze the impact on VAT/GST,
performance
excise and customs costs and
reporting before entering new • Keep up to date with
markets developments, especially in
key countries

1
VAT/GST
VAT rate changes map 20
Other VAT changes map 22
Countries 24

VAT/GST rate changes
Iceland
1 January 2013: VAT on hotels
and accommodations increased to
25.5% from the reduced rate of 7%.
Italy
1 July 2013: standard VAT rate will
Canada increase from 21% to 22%.
1 January 2013: Quebec — QST
applies at the rate of 9.975% to Netherlands
taxable supplies. 1 October 2012: standard rate VAT
increased to 21% (from 19%).
1 April 2013: British Colombia
transitions back to a provincial
sales tax (PST). Serbia
1 October 2012: standard VAT rate
Colombia
Reduction of the number of
applicable rates from seven (0%,
1.6%, 10%, 16%, 20%, 25% and
35%) to three (0%, 5% and 16%).
Czech Republic
1 January 2013: standard VAT
Jamaica rate increased to 21% (from 20%),
1 June 2012: GCT standard rate reduced VAT rate increased to 15%
reduced to 16.5% (from 17.5%) (from 14%).
1 January 2016: single uniform

VAT rate of 17.5% will apply.
Cyprus
14 January 2013: standard rate
of VAT increased to 18% (from
17%).
13 January 2014: standard rate

will increase to 19%, reduced
rate will increase to 9% (from 8%)

Croatia
1 January 2013: zero VAT rate abolished —
items previously taxed at this rate now subject
to 5% VAT rate.
Finland
1 January 2013: VAT rates rose by1% —
standard rate is now 24% and the reduced
rates are now 10% and 14%.
Japan
1 April 2014: consumption tax rate will
increase to 8% (from 5%).
1 October 2015: consumption tax rate

will increase to 10%.
Israel
1 September 2012: standard VAT rate
Spain
1 September 2012: standard VAT rate increased
to 21% (from 18%), reduced VAT rate increased
to 10% (from 8%).
France
1 January 2014: France plans to increase its
standard rate of VAT from 19.6% to 20%.
1 January 2014: the 7% reduced rate (which

applies to restaurants and digital books) will rise
to 10%, and the 5.5% reduced rate (which applies
to food) will be reduced to 5%. The middle rate
will be increased from 7% to 10%.

Other VAT/GST changes
Gambia
1 January 2013: VAT
introduced to replace
the former sales tax. The
standard VAT rate is 15%.
Cape Verde
1 January 2013: VAT
rate applicable to
Saint Lucia restaurant services and
1 October 2012: VAT introduced. to accommodations has
Seychelles
1 October 2012: VAT implemented (replacing GST).
VAT applies at a rate of 15% for taxpayers whose
annual turnover is SRC5 million or more.
Jamaica
1 June 2012: certain items that were previously
exempt became taxable at the standard rate.

European Union Iceland Norway
1 January 2013: new invoicing rules implemented. 1 January 2013: VAT on hotels and accommodations 1 January 2013: foreign entrepreneurs providing
increased to 25.5% from the reduced rate of 7%. transport services directly to and from Norway are
1 January 2015: final phase of VAT package to be
not obliged to register for VAT, but they are entitled to
introduced.
Moldova receive refund of VAT paid on purchases of goods and
1 January 2013: the long-term lease of means of services in Norway.
1 January 2013: VAT exemption granted for fixed
transport to non-business customers is taxable where
assets contributed into the share capital of a company 1 January 2013: zero rate for the supply of services
the customer is established.
no longer applies. relating to public roads and railways has been
abolished.
United Kingdom 1 January 2013: VAT rate for natural gas and
liquefied gas has increased to 8% (from 6%)
1 December 2012: VAT registration threshold was Hungary
removed for businesses not established in the UK.
Poland 1 January 2013: threshold for individual VAT
Ukraine exemption has been raised from HUF5 million to
1 April 2013: new rules for reverse-charged supplies
HUF6 million.
1 January 2013: VAT exemption applies to software of goods introduced.
and encryption devices for data protection.
1 April 2013: VAT exemption for non-public postal
services provided by Poczta Polska has been
abolished. These services will be subject to the
standard VAT rate of 23%.
South Korea
1 January 2013: debt collection
services are no longer exempt
from VAT.
China (mainland)
India
1 August — 31 December 2012: VAT
Proposed introduction of a new GST to pilot arrangements expanded to cover
replace most of the state and central 10 additional locations.
indirect taxes currently in force, date of
implementation not yet agreed.
In the meantime, the service tax legislation

has moved away from taxation based on
classification of services to taxation based
on a negative list.
Vietnam
A pilot VAT refund scheme began in
July 2012 and is expected to run until
30 June 2014.
Zambia
1 January 2013: the annual turnover
threshold for VAT registration increased
from ZMK200 million to ZMK800 million.
1 January 2013: the period within which

tax invoices can be used to support a VAT
claim has been reduced from 12 months to
six months.

Argentina
The 5% VAT refund that applies to 31 December 2013 (Resolution
purchases paid for with debit cards 940/2012 of the Ministry of Economic
(excluding purchases of liquid fuels and Affairs, published in the Official Bulletin of
natural gas) is generally extended until 31 December 2012).
Armenia
Effective 1 January 2013, a number of • Depending on the business carried out
changes were made to the Law on VAT by the taxpayer, tax invoices may be
including the following: issued in advance provided that the
goods are supplied or the services are
• Taxpayers, whose turnover does not
rendered on the supply date mentioned
exceed AMD58,350 for the calendar
in the tax invoice.
year, will be considered to be turnover
tax payers for that year, unless they
apply to become VAT taxpayers.
Australia
Effective 28 December 2012, the amount In 2010, amendments were made
of a “penalty unit” (which is used to to the law to reduce GST compliance
determine various penalties for tax and costs for businesses involved in
duties non-compliance) increased from the domestic transport of exported
AU$110 to AU$170. and imported goods. However, the
Australian Treasury has identified that
Legislative amendments are also
the 2010 amendments may not be
proposed that have an impact on the
achieving their intended outcome in all
scope for claiming refunds of overpaid
instances and it has recently released
GST. These changes were announced
a consultation paper which proposes
on 17 August 2012, which is also the
some further amendments to the GST
proposed date of effect. During the
Act. The consultation period closed on
consultation process for the proposed
23 November 2012 and the Treasury
change, significant concern was expressed
is yet to respond to the submissions
regarding their scope. At the time of
received. Therefore, at the time of writing,
writing, the Australian Government has
it is not certain what further changes will
not yet responded to the submissions
be made to the GST treatment of cross-
received during the consultation.
border transport services.

Austria
Effective 1 January 2013, in accordance of the contents and the legibility of the
with EU law, the long-term lease of invoice must be ensured. Taxable persons
means of transport (such as cars, vans must determine how to satisfy these
and boats) to non-business customers is requirements using business controls
taxable where the customer is established that create a reliable audit trail between
(not where the lessor has established the invoice and the supply of goods or
its business). An exception applies to services.
the leasing of pleasure craft, which are
Effective 1 January 2013, the threshold
deemed to be supplied in the place where
for submitting INTRASTAT statistical
the pleasure craft is made available to the
reports has increased to €550,000
recipient of the service (if that is where
annual value of intra-Community supplies
the lessor has established its business
or acquisitions (previously the limit was
or has a permanent establishment that
€500,000).
performs the service).
Also effective 1 January 2013, all forms
of electronic invoicing are permitted. The
authenticity of the origin, the integrity
Azerbaijan
Effective 1 January 2013, the VAT 12 consecutive months (previously, the
registration threshold has increased. registration threshold was AZN90,000
Taxable persons are obliged to register for individuals and AZN150,000 for
for VAT if their taxable income companies).
exceeds AZN120,000 for the previous
Belarus
Effective 1 January 2013, the previous • The date of supply for goods, works,
opportunity to choose the method of services and property rights performed
revenue recognition (i.e., to choose the by foreign legal entities not registered
accrual or cash methods of revenue with the Belarusian tax authorities is
recognition) was abolished. The unified the date of payment, including the date
approach has been introduced for all of any advance payments (or other
taxpayers. As a result of the change, form of obligation).
the date of supply for goods, works,
• The date of supply for goods, works,
services and property rights is determined
services and property rights performed
as the date of dispatch of the goods,
by foreign legal entities not registered
performance of the works or rendering of
with the Belarusian tax authorities
the services or transfer of the property
under commission, trust and other
rights (i.e., using the accrual method).
similar agreements concluded with legal
The payment date is disregarded.
entities and individual entrepreneurs
The following main exemptions to this rule registered with the Belarusian tax
have been introduced: authorities is the date of dispatch of
the goods, performance of the works or
rendering of the services or transfer of
the property rights disregarding the day
of payment.

Belarus (continued)
• The date of supply for goods for loan Effective 1 January 2013, a “tax free”
transactions (excluding commercial mechanism has been introduced allowing
loans) is the date that the income is foreign individuals to claim a refund of
received. VAT on purchases made in Belarus upon
export of the goods from the territory of
the Customs Union.
Belgium
In accordance with EU Directive 2008/8/ The provisions of Directive 2010/45/EU
EC, effective 1 January 2013, the place relating to electronic invoicing came into
of supply for the long-term hiring of effect on 1 January 2013. The new rules
means of transport to a non-taxable apply to the contents of VAT invoicing,
person is the place where the customer the obligation to issue an invoice, and the
has its place of establishment. However, storage of invoices. For intra-Community
the place of hiring a pleasure boat to a supplies of goods, invoices must be
non-taxable person is the place where issued no later than on the 15th day of
the pleasure boat is actually put at the the month following the month when the
disposal of the customer, where this chargeable event occurs. Under the new
service is actually provided by the supplier law, the storage period for invoices is
from his place of business or a fixed seven years.
establishment situated in that place.
Benin
Effective 1 January 2013, the rental of and breeding activities. However, these
unfurnished residential properties and the items are still subject to Prélèvement
domestic supply of gas are exempt from communautaire de solidarité (PCS) tax,
VAT. Prélèvement communautaire (PC) tax,
Taxe statistique (STAT) and Taxe de
The following transactions are exempt
voierie (TV) tax.
from VAT and customs duties:
• The importation, production and sale
• The importation, production and sale of
of machinery and material used for
agricultural inputs, as well as phyto-
packaging and manufacturing activities.
sanitary instruments. This exemption
However, these items are still subject to
also extends to the 1% Redevance
PCS tax, PC tax, STAT tax and TV tax.
statistique (RS) tax.
• The importation, acquisition of bicycles,
• The importation, production and sale
bicycle helmets and motorcycles
of accessories and machine spare
helmets. However, these items are still
parts or equipment to be used by
subject to PCS tax, PC tax, STAT tax
small businesses for the purpose of
and TV tax.
processing and storage of agricultural
products. The exemption applies also
to small businesses carrying on fishing

Brazil
Resolution 13/2012 (Resolução do The unified ICMS rate does not apply to
Senado 13/2012) which is due to come transactions involving:
into force as of 1 May 2013, has unified
• Goods with no Brazilian national
the state VAT (Imposto sobre a Circulação
equivalent according to Council of
de Mercadorias e Serviços — ICMS) rates
Foreign Commerce Representatives
that apply to interstate sales involving
(Conselho de Ministros da Câmara de
imported goods, after customs clearance
Comércio Exterior — CAMEX)
procedures. The previous variable rates
(7% or 12%) applicable on interstate sales • Basic Productive Process (Processo
have been unified into a single rate of 4% Produtivo Básico — PPB) products
for transactions falling within the scope used by factories established in the
of the resolution. The unified ICMS rate free trade zone of Manaus or that are
applies to: subject to other listed tax incentives
• Goods that are not subjected to any • Natural gas originating from foreign
industrial process after customs sources
clearance
Effective June 2013, companies must
• Goods that are subjected to an specify on invoices and receipts the taxes
industrial process after customs charged that are part of the total amount
clearance, provided that the resulting of the product sale price. Companies
product price does not exceed 2.5 times must list the amount of municipal, state
the original price of the import. This and federal taxes levied for each product
ratio of import price to final product described on the invoice or receipt.
price must be verified by tax agents, Alternatively, such information may be
according to procedures to be regulated displayed in plain view at the business
by the National Council of Fiscal establishment. Companies that fail to
Policy (Conselho Nacional de Política comply with this requirement will be
Fazendária — CONFAZ) subject to penalties, such as monetary
fines, or the suspension or revocation of
the license to operate.
Bulgaria
Effective 1 January 2013, the following • The deadline for submitting a request
VAT law changes apply: for a refund of VAT incurred before VAT
registration has been extended from
• The limitation for the deduction of
seven to 45 days, upon the completion
input VAT relating to hire cars, fuel for
of the VAT registration procedure.
these vehicles and related maintenance
services has been abolished. • Taxable persons are permitted to issue
summary invoices covering several
• The place of supply for long–term rental
separate supplies of goods and services,
or provision of vehicles to non–taxable
provided that the VAT on the supplies
persons is where the customer is
mentioned in the summary invoice
established.
becomes chargeable in the same
• The time of supply for continuous intra- calendar month. A summary invoice
Community supplies of goods, where should be issued no later than the last
the supply lasts for longer than one day of the month to which it refers.
month, is at the end of each calendar
month.

Bulgaria (continued)
• A simplified VAT invoice has been Effective 1 January 2013, the thresholds
introduced that contains less for INTRASTAT reports have increased
compulsory information. A simplified BGN240,000 annually for intra-
VAT invoice can be issued by taxable Community supplies — both dispatches
persons for supplies of goods and and arrivals (previously the threshold
services if the amount of the invoice was BGN230,000). The threshold for
is less than €100 (including VAT). statistical declarations for dispatches
Simplified invoices may not be issued is now BGN11 million (previously it
in the case of distance sales or intra- was BGN9 million) and for arrivals
Community supplies of goods. it is BGN5 million (previously it was
BGN4 million).
Burkina Faso
Effective 1 January 2013, imports of sales of such equipment are exempt from
solar energy equipment are exempt from VAT.
VAT and customs duties and domestic
Burundi
Effective 1 January 2013, the following • A zero VAT rate applies to international
changes apply: transport.
• Agricultural assets are generally exempt • VAT identification numbers have been
from VAT. introduced for taxable persons.
• VAT paid on investment instruments is • Non-taxable persons may opt to be
fully deductible. subject to VAT.
Canada
Prince Edward Island has announced that Nova Scotia has announced that it will
it will adopt the federally administered lower the provincial component of its
Harmonized Sales Tax (HST) effective HST rate from 10% to 9% effective
1 April 2013, with a 9% provincial 1 July 2014, and to 8% effective 1 July
component, for a combined GST/HST rate 2015.
of 14%. The Comprehensive Integrated
Quebec has passed legislation which
Tax Coordination Agreement between
essentially implements measures
the Government of Canada and the
announced on 31 May 2012 in
Government (CITCA) of Prince Edward
Information Bulletin 2012–4 on the
Island was signed on 23 November
further harmonization of the QST with the
2012. The CITCA provides the framework
GST/HST. The QST is a tax levied on goods
necessary for the implementation of the
and services in the province of Quebec,
HST in Prince Edward Island and confirms
and is similar to the GST in Canada.
the province’s decision to eliminate the
Effective 1 January 2013, GST was
Provincial Sales Tax (PST).
removed from the QST base. However,

Canada (continued)
this was compensated by an equivalent exiting the HST system and returning
increase of 0.475% in the QST rate – to a PST system. The Provincial Sales
therefore the effective QST rate remains Tax Act (PSTA) received Royal Assent
at 9.975%, and the combined effective on 31 May 2012, and provides for the
GST/QST rate remains at 14.975%. province’s transition back to a PST
effective 1 April 2013. The province
Effective 1 January 2013, the treatment
has not simply re-enacted its old Social
of financial services for QST purposes
Service Tax Act (SSTA). The new PSTA
changed from zero-rated to exempt,
is substantially different in form and
similar to the current rules under the GST/
structure from the SSTA, with broadened
HST. Accordingly, all the specific rules
definitions of taxable services (now known
regarding financial services under the
as “related services”), telecommunication
GST/HST now apply to the QST. Financial
services (which now include the right to
institutions are not entitled to recover
download, view or access information
QST payable after 31 December 2012 for
or images, such as online data, movies
properties and services acquired for use
and music files) and separate rules
in supplying exempt financial services. As
for software. In addition, the province
a result, there is an additional QST cost
adopted a more detailed and complex
for financial service organizations.
structure for determining the purchase
The province of British Colombia price and lease price, and also adopted
eliminated its provincial sales tax (PST) the GST/HST timing rules with respect
system on 1 July 2010 and opted into to the application of the tax. Transitional
the federally administered HST system rules will apply to supplies that straddle
at the rate of 12% (5% federal GST and the change and for real property owned
a 7% provincial component). However, as at 1 April 2013.
effective 1 April 2013, the province is
Cape Verde
The VAT rate applicable to restaurant
services and to accommodations has
China
A VAT pilot has been implemented in Location VAT Pilot start date
Shanghai and Beijing since 1 January
Jiangsu Province and 1 October 2012
2012 and 1 September 2012, Anhui Province
respectively. According to Caishui [2011]
Fujian Province and 1 November 2012
No.71, the VAT Pilot has been expanded
Guangdong Province
to the following locations progressively as
set out in the table at right: Tianjin, Zhejiang 1 December 2012
Province and Hubei
Province

China (continued)
The applicable VAT rates are: services in China, its agent must act as
the VAT withholding agent. If the entity
• 17% for leasing of movable property
or individual does not have a domestic
• 11% for the provision of transportation business office, the service recipient must
services act as the VAT withholding agent. The
withholding VAT paid may be recovered
• 6% for the provision of modern services
as input VAT if the withholding agent or
(other than lease of movable property)
service recipient is registered as a general
• Zero for any other taxable services VAT taxpayer and has purchased the
defined by the Ministry of Finance services for business purposes.
(MOF) and the State Administration of
Until now, no announcement has been
Taxation (SAT)
made about any upcoming legislative
Non-resident companies and foreign changes to come into effect for 2013.
entities that provide transportation and However, an expansion of the VAT Pilot
certain modern services under the VAT to more locations and industries (e.g.,
Pilot regime are subject to withholding postal and telecommunication, building
VAT in China. Where an overseas and construction services) is expected to
entity or an individual provides taxable happen in the near future.
Colombia
Effective 1 January 2013, the number of at a rate of 8%. The consumption tax also
VAT rates has been reduced from seven applies to mobile phone services (at a rate
to three. The current rates are 0%, 5% and of 4%) and to the sale of certain goods
16%; previously the rates were 0%, 1.6%, such as yachts, boats and motorcycles
10%, 16%, 20%, 25% and 35%. Items that (generally at an 8% rate). The new tax is
were subject to the 20%, 25% and 35% not creditable against the VAT.
rates are now subject to the 16% VAT rate
Effective 6 December 2012, a full refund
plus excise tax.
is available for VAT paid by non-resident
Effective 1 January 2013, restaurant foreign tourists on the purchase of
services (which were previously subject specific goods such as shoes, perfumes,
to the 10% VAT rate) have been removed emeralds and handicrafts.
from the scope of VAT. They are now
subject to a new national consumption tax

Croatia
Effective 1 January 2013, the VAT rate of • Minimum invoice requirements have
0% (for items such as bread, milk, books, been introduced for cash transactions
certain drugs, implants, scientific journals (aligned with the VAT Act) with the aim
and public film screenings) was increased of harmonizing invoicing requirements
to 5%. for all business activities.
A new VAT Act is expected to come into • All VAT payers must submit VAT
force when Croatia joins the EU, currently returns electronically (previously, it
scheduled for 1 July 2013. was mandatory only for those with
annual taxable supplies exceeding
In the meantime, some amendments to
HRK800,000).
the General Tax Act have been adopted,
including the following:
Curaçao
Amendments to the turnover tax (TOT) to the “primary necessities of life” (e.g.,
legislation will likely become effective in potatoes, vegetables, fruit) and impose
the course of 2013. These amendments a higher rate of 9% TOT on goods or
are likely to provide for an exemption services considered to be either luxurious
from TOT for the supply of goods related or unhealthy.
Cyprus
Effective 1 January 2013, the each month that the failure to register
INTRASTAT reporting thresholds have continues. Interest is also charged at the
increased as follows: rate of 4.75% annually on the amount of
outstanding VAT.
• Intra-Community acquisitions
€100,000 (Arrivals) In accordance with EU Directive 2008/8/
EU, effective 1 January 2013, the place
• Intra-Community supplies €55,000
of supply for the long-term hiring of
(Departures)
means of transport to a non-taxable
In addition, special thresholds have been person is the place where the customer
set at €1,850,000 annually for arrivals has its place of establishment. However,
and €5,800,000 for departures the place of hiring a pleasure boat to a
non-taxable person is the place where
Effective 14 January 2013, the the pleasure boat is actually put at the
standard rate of VAT increased to disposal of the customer, where this
18% (it was previously 17%). Effective service is actually provided by the
13 January 2014, the standard rate will supplier from his place of business
increase to 19% and the 8% reduced rate or a fixed establishment situated in
will increase to 9%. that place. In addition to the above,
Interest is charged at a rate of 4.75% effective 1 January 2013, the use and
annually on outstanding VAT amounts. enjoyment rules apply to the long-term
This 4.75% interest rate applies to late hiring of means of transport. The use
payments of VAT. A penalty applies to and enjoyment rules do not apply if the
late VAT registration, assessed at €85 for recipient is an EU taxable person.

Czech Republic
Effective 1 January 2013, the standard • The contents of invoices have also
VAT rate increased from 20% to 21% and been simplified. It is now sufficient
the reduced rate increased from 14% to to stipulate “reverse charge” if the
15%. The increase in the VAT rates will customer has the tax liability, or “self-
apply until 31 December 2015, when billing” if self-billing arrangements
a single uniform VAT rate of 17.5% will apply.
apply.
• A new definition of an establishment
The following VAT legislative changes also for VAT purposes has been introduced,
apply with effect from 1 January 2013: based on the European Council’s
implementing regulation, which
• In accordance with EU Directive
distinguishes between an active and a
2008/8/EC, effective 1 January 2013,
passive establishment (the latter only
the place of supply for the long-term
receiving supplies but not providing
hiring of means of transport to a non-
them).
taxable person is the place where the
customer has its place of supply for • There have been changes in the
the establishment. However, the place rules governing the registration and
of long-term hiring of a pleasure boat deregistration of taxpayers. Also the
to a non-taxable person is the place concept of an “identified person” has
where the pleasure boat is actually put been introduced into the VAT law.
at the disposal of the customer, where
• VAT payers may use the exchange rate
this service is actually provided by the
published by the European Central
supplier from his place of business or
Bank for invoice currency conversions,
a fixed establishment situated in that
as well as that provided by the Czech
place.
National Bank.
• In accordance with EU Directive
• The extent to which postal services
2010/45/EU, new rules apply regarding
are exempt is restricted to basic postal
the rules on invoicing and archiving
services (in line with the Postal Services
of tax documents. The new rules
Act).
harmonize the rules governing invoicing
and places paper and electronic invoices • The period after which the transfer
on an equal footing. The previous of buildings, apartments and non-
requirements for electronic invoices are residential spaces is exempt from VAT
being reduced and the duty to provide is extended from three to five years.
invoices with an enhanced electronic The three-year term will apply to
signature or to send them by EDI has transfers of real estate acquired up to
been abolished. The customer’s consent the date when the amendment takes
to electronic invoicing is still required, effect. There is also an option to apply
but in practice, this consent can be VAT even for the lapse of the five-year
given in any form. The supplier and period. Under transitional provisions,
customer must ensure the authenticity a VAT payer will be able to decide to
of the origin, integrity of the contents, apply output VAT even for the transfer
and the legibility of tax documents for of real estate acquired prior to the date
the entire time they are archived. As when the amendment took effect.
well as through an electronic signature
• A timely unlimited VAT adjustment
and EDI, this can be achieved by means
applies to buildings, flats and business
of control mechanisms that create a
premises that do not qualify as capital
reliable link between the tax document
goods prior to their first use.
and the relevant supply.

Czech Republic (continued)
• The scope of the exemption for • The last change to guarantees
insurance activities is restricted to involves transactions with a
the “provision of insurance” and the distributor of fuels who is not listed
“provision of reinsurance” (previously, on the register of fuel distributors
the VAT Law referred to “insurance under the Fuel Act at the time that
or reinsurance activities”). Services the transaction takes place. In this
provided during the settlement of case, the customer must act as
insurance claims will no longer be guarantor of the unpaid tax.
exempt from VAT if provided separately.
• Children’s diapers and certain other
• The provision relating to the guarantee health requirements that were taxed at
for unpaid tax will now affect a far a lower rate will be liable to VAT at the
larger group of entities than previously: standard rate.
• Joint liability will apply to payments Effective 1 January 2014, it will be
made to “unauthorized bank mandatory for VAT payers to submit VAT
accounts” (bank accounts not returns and other VAT-related reports
published by the tax authorities) electronically. However, electronic
and to “unreliable suppliers” (a list submission will not be mandatory for
of unreliable VAT payers will be individuals with an annual turnover of less
published by the tax authorities). than CZK6 million.
• The rules governing guarantees will
also have an impact on authorized
recipients who have a duty to report
and pay excise duty in connection
with the acceptance of selected
products from another EU member
state for another buyer.
Denmark
As a result of changes to the EU VAT Effective 1 July 2012, any business
invoicing rules effective 1 January 2013, registered for VAT that receives goods
the Danish invoicing rules have been or services from a Danish supplier for an
amended specifically with respect to the amount exceeding DKK10,000 (inclusive
following: of VAT), where the payment for the
supply is not made via a bank or payment
• Any invoice issued by the purchaser
provider that secures the identification
under a self-billing arrangement must
of the payer and the recipient of the
mention the word “self-billing” or
amount, is jointly liable for the VAT on the
selvfakturering.
supply if the supplier has not correctly
• VAT payers who apply a profit margin settled the VAT. If the payment cannot
scheme for second-hand goods, be made through such institutions the
artwork, collectibles and antiques or buyer may release himself of the liability
the margin scheme for travel agents by reporting the transaction to the Danish
and travel agencies must state this on tax authorities within 14 days of payment
the invoice and expressly mention that and within one month of receipt of an
any VAT included is not deductible. invoice.
• The threshold for issuing a simplified
invoice is raised from DKK750 to
DKK3,000.

Denmark (continued)
Effective 1 January 2013, the Danish DKK50,000 or the work is completed
VAT Act requires that all building sites within one working day. The signs may
on private property where repair, also be avoided if the construction site
modernization, reconstruction or is a multi-story building in a closely
construction of buildings take place must populated area. Foreign businesses must
be marked by signs clearly stating which include on the sign information that they
companies are working on the site, unless are registered in the Danish Register for
the contract amount does not exceed Foreign Service Providers.
Dominican Republic
In October 2012, the Dominican • The tax base is due to be broadened by
Government’s economic commission including goods and services that were
formally presented a Proposal for the previously exempted, such as coffee,
Reinforcement of the Government Tax sugar and cooking oils.
Collection Capability for Sustainable
• New products that are not currently
Development, which includes a number
taxable are subject to rates that will
of amendments to the Impuesto a las
increase year to year as follows: 10% for
transferencias de bienes industriales
financial year 2013, 12% for financial
(ITBIS) rules, including:
year 2014, 14% for financial year 2015
• A reduction in the tax rate on transfers and 16% for financial year 2016.
of immovable property to 3%.
• The tax rate is due to be increase from
16% to 18% for financial years 2013
and 2014 but it will then decrease to
16% for financial year 2015.
Ecuador
In 2013, certain financial services the general VAT rate of 12% instead of at
provided by private financial entities and the zero rate (0%).
credit card administrators are subject to

Estonia
Effective 1 January 2013, the following • The following terms must be included in
VAT changes apply: tax invoices in appropriate cases:
• The place of supply for the long-term • “Reverse charge” if a domestic
hiring of a means of transport to a reverse charge applies or if Articles
non-taxable person is the place where 194-199 apply
the customer is established or resides
• “Margin scheme — travel agents/
(except for hiring a pleasure boat to
second-hand goods/works of art/
a non-taxable person if the service is
collector’s items and antiques” in
provided by the supplier from his place
cases where special arrangements
of business in Estonia).
apply for calculating VAT.
• Taxable persons are obliged to issue an
invoice for intra-community supplies of
goods or services by the 15th calendar
day following the month that the goods
were dispatched or made available to
the purchaser or the services were
provided.
European Union
The European Commission sought Under Directive 2010/45/EU, individual
the views of EU businesses about VAT member states are no longer permitted
invoicing in 2008.1 It found that the to dictate the technology to be used
uptake of electronic invoicing and to guarantee the authenticity of the
archiving by EU businesses was far origin and the integrity of the content
lower that it had expected, with complex of electronic invoices. Instead, the focus
legislation and the many options has shifted to businesses to guarantee
available to the individual member states the authenticity and integrity of invoices
identified as the main stumbling blocks. through internal business controls and
The second directive on VAT invoicing technology.
(Directive 2010/45/EU)2 was adopted
However, the new directive does not
on 13 July 2010, which aims to address
harmonize the rules for the electronic
these issues with a new set of harmonized
archiving of invoices (see Figure 2 on
rules (see Figure 1 on next page). The
next page). The location of the archive,
provisions of the directive must be applied
the format in which the invoices must be
by all 27 EU member states3 with effect
archived and the archiving period are,
from 1 January 2013.
therefore, still left to the discretion of the
individual member states.
1. “VAT — Review of existing legislation on invoicing,” European Commission, ec.europa.eu/

taxation_customs/common/consultations/tax/article_5133_en.htm.
2. Council Directive 2010/45/EU, Official Journal of the European Union, 2010

(accessed via eur-lex.europa.eu).
3. Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania,
Slovak Republic, Slovenia, Spain, Sweden, United Kingdom

European Union (continued)
Figure 1. Comparison of the previous and new rules related to authenticity
Previous rules Directive 2010/45/EU new rules

Article 232: Invoices issued Article 232: The use of an electronic invoice shall be
pursuant to Section 2 may be subject to acceptance by the recipient.
sent on paper or, subject to
Article 233: The authenticity of the origin, the
acceptance by the recipient,
integrity of the content and the legibility of an
they may be sent or made
invoice, whether on paper or in electronic form, shall
available by electronic
be ensured from the point in time of issue until the
means.
end of the period for storage of the invoice.
Article 233: Invoices sent or
Each taxable person shall determine the way to
made available by electronic
ensure the authenticity of the origin, the integrity of
means shall be accepted by
the content and the legibility of the invoice. This may
member states provided that
be achieved by any business controls, which create a
the authenticity of the origin
reliable audit trail between an invoice and a supply of
and the integrity of their
goods or services.
content are guaranteed by
means of: “Authenticity of the origin” means the assurance of
the identity of the supplier or the issuer of the invoice.
• Advanced electronic
signature “Integrity of the content” means that the content
required according to this directive has not been
• Electronic data
altered
interchange (EDI)
Other than by way of the type of business controls,
• Other electronic means (if
the following are examples of technologies
accepted by member state)
• An advanced electronic signature
• Electronic data interchange (EDI)
Figure 2. Comparison of the previous and new rules related to storage
Previous rules Directive 2010/45/EU new rules

Article 247: 1. E
ach member state shall determine
the period throughout which taxable
[Optional, TBD by member state]
persons must ensure the storage of
1. Limitations as to the place of storage invoices
2. Limitations as to the original format 2. M

ember states may require that invoices
be stored in the original form in which
3. Storage: non-harmonized period
they were sent or made available,
whether paper or electronic
3. T
he member state may lay down specific
conditions prohibiting or restricting the
storage of invoices in a country with
which no legal instrument exists relating
to mutual assistance

On 1 January 2015, the VAT rules on the non-EU businesses supplying electronic
place of supply of services will change for services to EU consumers. The current
businesses supplying telecommunications, scheme will be extended to cover
broadcasting or electronic services to EU telecommunications and broadcasting
private consumers (B2C supplies). VAT services. At the same time, it will also
will become due where the customer be extended to cover the same types of
is established or resident. Currently services supplied by EU businesses.
businesses established in the EU that
Businesses that provide electronic
provide these services charge VAT based
services to EU private individuals should
on where the supplier is established.
start to anticipate the likely impact of
As a result of the change, it is necessary these changes on their operations,
to broaden the scope of the EU one-stop- reporting systems and pricing models.
shop registration scheme. The existing
one-stop-shop scheme only applies to
Fiji
With effect from 1 January 2013, zero- • Any payment made by the Government
rated supplies include the following: from monies received in accordance
with the above paragraph, paid directly
• Any payment made by a donor agency
to any contractor with the approval of
in the form of a grant or donation
the Minister of Finance in consultation
received by the Government with the
with the Chief Executive Office of
approval of the Minister of Finance in
the Fiji Islands Revenue and Customs
consultation with the Chief Executive
Authority
Office of the Fiji Islands Revenue and
Customs Authority, if it is deemed to be
consideration for a supply of goods and
services
Finland
Effective 1 January 2013, the following • VAT on imports is levied only if the
changes apply; VAT amount is €5 or higher (previously
€10).
• All VAT rates rose by 1%. As a result,
the standard rate is now 24% and the • The long-term renting of means of
reduced rates are now 10% and 14%. transports to consumers (for vehicles
lettings over 30 days, for boat lettings
• The annual late filing interest penalty is
over 90 days) is taxed in the country of
reduced from 20% to 15%.
residence of the consumer.

Finland (continued)
To comply with Directive 2010/45/EU • If the customer is liable for the payment
regarding the rules on invoicing, the of the VAT, the term “reverse charge”
following changes apply with effect from must be included on the invoice.
1 January 2013:
• If the customer receiving a supply
• Rules have been introduced to issues the invoice instead of the
determine which country’s invoicing supplier, the term “self-billing” must be
rules apply. included on the invoice.
• There is no longer an obligation to issue • If a margin scheme applies, the term
invoices for advance payments for intra- “margin scheme – travel agents” or
community supplies. “margin scheme – second-hand goods,
works of art or collector’s items and
• Simplified invoices may be used for
antiques” must be included on the
transactions not exceeding a value of
invoice.
€400 (previously the limit was €250).
• The authenticity of the origin, the
• For intra-community supplies of goods
integrity of the content and the legibility
carried out in accordance with the
of an invoice must be ensured until the
conditions specified in Article 138 or
end of the storage period of the invoice.
for supplies of services for which VAT
is payable by the customer pursuant to
Article 196, an invoice must be issued
at the latest by the 15th day of the
month following the supply of goods or
services.
France
Effective 1 October 2012, the répondant Effective 1 January 2014, France plans
fiscal mechanism was abolished. It to increase its standard rate of VAT from
allowed non-established businesses to 19.6% to 20%. On the same date, the 7%
register for VAT in France and account for reduced rate (which currently applies to
French VAT on supplies made and recover restaurants and digital books) will rise to
VAT on purchases. This change, therefore, 10%, and the 5.5% reduced rate (which
affects non-established businesses that applies to food) will be reduced to 5%. The
are registered for VAT in France and their middle rate will be increased from 7% to
VAT-registered customers. 10%. It is also possible that a 5% VAT rate
will apply to supplies of digital books.
Effective 1 January 2013, the VAT rate
applied to books and live performances
(theater, circus and concerts) is reduced
from 7% to 5.5%.
Gambia
Effective 1 January 2013, as part of a A zero rate applies to domestic sales of
comprehensive tax reform, Gambia has certain essential foodstuffs including rice,
introduced a VAT to replace the former cooking oil, sugar and flour.
sales tax. The standard VAT rate is 15%.

Germany
Effective 1 January 2013, the electronic is expected that this will probably happen
submission of VAT returns is only possible effective 1 October 2013.
with authentication.
Proposed amended regulations are
Also effective 1 January 2013, the free intended to soften the impact of the
port of Hamburg (Freihafen) is abolished. stringent compulsory provisions of the
Until 2012, this free port zone was VAT Implementation Ordinance, which
treated as a foreign territory for VAT has been valid since 2012 and provides
purposes. It now forms part of the regular, that the confirmation of arrival is the only
domestic territory of Germany for VAT possible evidence in these cases. Under
purposes. the regulations, other documentary
proofs will probably be allowed.
Under new rules, which have applied,
in theory, since 1 January 2012, a new The draft Annual Tax Act 2013
standard of proof applies for intra- (Jahressteuergesetz 2013) contains a
Community supplies. An intra-Community number of new regulations regarding
supply will only be accepted as zero-rated the content of a VAT invoice. It has
if a confirmation of arrival document since become unlikely that the law will
(Gelangensbestätigung) is available. The be enacted; however, it is expected that
confirmation must contain the following the following changes will be enacted
information: sometime during 2013:
• The name and address of the customer • If the recipient of a service issues a
self-invoice, this must be indicated on
• The amount and customary description
the invoice using the word “Gutschrift”
of the supplied goods
(self-invoicing).
• In the case of transport by the supplier
• If the recipient of a suppy is liable to
or on behalf of the supplier or on behalf
account for the VAT, under the reverse
of the customer, the place and date
charge, the invoice must include the
of receipt of the delivered goods in
words “Steuerschuldnerschaft des
another EU member state
Leistungsempfängers” (tax liability of
• Or in case of transport by the customer recipient applies).
itself, the date and place of the end of
• For supplies that are taxable in
the transport in another EU member
Germany made by an EU taxable person
state
who is not established in Germany
The German Federal Ministry of Finance and for which the reverse charge
(Bundesfinanzministerium, BMF) has mechanism applies, the VAT invoicing
issued a ruling with an example of the rules of the EU member state where
information required for confirmation of the supplier is established apply. This
arrival in English, German and French. rule does not apply in the case of self-
A new draft interpretative letter of invoicing.
BMF relating to the documentary and
• Invoices for intra-Community supplies
accounting evidence for intra-Community
and for specific supplies and services
supplies has also been issued.
subject to the reverse charge must be
However, during a temporary grace issued by the 15th day of the month
period, documentary evidence of zero- following the month of the taxable
rating can still be made under the old event.
rules, which were valid until 2011. The
period of grace will expire when the
amended regulations become effective. It

Guatemala
Governmental Agreement number identification number (Número de
5–2013 introduced the new VAT Identificación Tributaria or NIT). The tax
Regulation, which came into effect on authorities are empowered to require
9 January 2013. This new set of rules supporting documentation to register
supersedes the Governmental Agreement the taxpayer’s fiscal domicile.
No. 424–2006. Among other important
• The tax authorities may authorize
changes, the new regulation establishes
the use of invoices for temporary
the following:
establishments.
• A definition of the events that
• Specific purchases are listed for
are treated as “first transfers” of
which VAT credits are recognized for
immovable property.
exporters and taxpayers that sell goods
• A requirement to include tips and or services to exempt taxpayers.
gratuities in all invoices issued for the
• A chapter has been introduced for VAT
sale of goods or services.
withholding agents.
• An express indication that taxpayers
engaged in VAT taxable transactions
are required to register formally with
the tax authorities to obtain a tax
Honduras
Effective 29 October 2012, Decree • 10 years for taxpayers or responsible
139–2012 amended Section 136 of the parties that are obliged to be registered
Honduran Tax Code, which establishes the as taxpayers but are not registered as
statute of limitations as follows: such
• Four years for taxpayers or responsible • 10 years if the taxpayer’s returns hide
parties that have imported, exported or data, facts or information to avoid the
carried out any other operation under total or partial payment of a tax or the
customs regimes omission amounts to tax fraud
• Five years for taxpayers or responsible
parties who are registered as taxpayers
or who are not legally obliged to be
registered
Hungary
A domestic VAT summary report has been to minimize the additional administration
introduced effective 1 January 2013. created by the measure while ensuring
Mindful of the administrative burden that an appropriate level of efficiency for
this report will create for VAT taxpayers, tax audits (e.g., by setting a threshold
the Ministry for National Economy and the value for invoices or by selecting certain
tax authorities are considering options industries).

Hungary (continued)
Effective 1 January 2013, the threshold • Paper-based and electronic invoices
for individual VAT exemption has been must be treated the same and the
raised from HUF5 million to HUF6 million authenticity of the origin, the integrity
of data content and legibility must be
New rules enable small enterprises to
maintained for both types of invoices
apply cash accounting. Conditions for
from the date of issuance to the end
taxpayers to apply cash accounting
of the mandatory archiving period.
include:
There is no requirement as to how this
• Having a maximum annual turnover criterion should be met.
of HUF125 million (approximately
• The customer’s tax number or the VAT
€450,000) in the current tax year and
group tax numbers must be indicated
in the previous tax year.
on invoices if the VAT recharged
• Having a place of business, permanent reaches or exceeds HUF2 million
address or usual residence in Hungary. (approximately €7,200) and the
supplier is established in Hungary.
• The taxpayer is not subject to
bankruptcy procedure or liquidation. • The references “cash-based
accounting” and “self-billing” must be
• The taxpayer has not been granted the
indicated on invoices subject to these
individual exemption.
regimes. Taxpayers need only indicate
Most of the other changes in VAT law are “reverse charge” on invoices they issue
primarily concerned with harmonizing for supplies subject to the reverse
Hungarian VAT law with EU Directives, charge regime.
e.g., on the place of supply of a service
• For invoices issued in a language other
and the rules on invoicing. Changes that
than Hungarian, the above references
are effective 1 January 2013 include the
can be indicated in the foreign language
following:
in question.
• The transfer of a business division will
• The mandatory data content of invoices
not give rise to a VAT liability if certain
is extended to make the information
legislative conditions are met.
contained on invoices uniform across
• Monthly invoices must be raised for the EU.
periodic intra-Community supplies of
• Also in line with the directive, the
goods if the supply lasts for more than
application of electronic invoices is
one month.
subject to the consent of the party
• For intra-Community transactions, receiving the invoice.
invoices must be issued by the 15th day
• As another step toward harmonization,
of the month following the month of
the requirement for electronic invoices
supply.
has been amended so that a qualified
• For the purposes of converting foreign electronic signature may be used
currency amounts shown on VAT on electronic invoices instead of an
invoices into Hungarian forints (HUF), advanced electronic signature and a
the European Central Bank exchange time-stamp.
rate may be used as well as that of the
• The number of cases that are eligible
Hungarian National Bank.
for simplified invoicing has been
increased. The data content of invoices
may be simplified if the gross amount
does not exceed €100.

Hungary (continued)
• The intra-Community leasing of long- • 50% of the VAT amount is deductible
term means of transport to non-taxable for services related to the operation
persons is taxable in the member state of passenger cars (e.g., repairs). The
of establishment of the customer. partial deduction ban does not apply
to taxpayers that can prove that at
• Taxpayers are entitled to deduct the
least 50% of the consideration for
VAT charged on transactions that
the supply is included in the tax base
relate to supplies performed outside
of the consigned services or if the
Hungary, if the VAT would be deductible
services are included in the tax base
if the supplies had been carried
of the passenger car lease as direct
out in Hungary (e.g., VAT exempt
expenditure.
international flights).
Effective 1 April 2013, taxpayers that
• For reverse charge transactions,
use cash registers must report the
taxpayers are entitled to report changes
information stored in their machines with
to deducible VAT in the same VAT
respect to receipts and cash turnover to
return in which they must report the
the tax authorities. The tax authorities
change to the payable VAT.
will be entitled to generate reports
• The supply of immovable property is directly from the cash registers via
subject to a domestic reverse charge telecommunications infrastructure.
even if the creditor of the taxpayer
appoints a third party as the buyer of
the immovable property.
Iceland
VAT on hotels and accommodations
increased to 25.5% from the reduced
rate of 7%.
India
The Central Government of India has was later deferred. Given the political
proposed the introduction of a new stalemate on the necessary amendments
GST to replace most of the state and to the Constitution, it seems that the
central indirect taxes currently in introduction of the new tax will be further
force. Given that the GST is likely to delayed. Currently, no definite date has
have an impact on virtually every facet been announced for its implementation.
of business, companies operating in In the past, there has been considerable
India should continue to monitor these disagreement between the Central
developments carefully to prepare for the Government and the states about various
implementation of the new tax. design issues, including the GST rates,
the list of non-taxable items and the
The new tax is planned to be a “dual”
small-trader threshold. However, some
GST, consisting of Central GST (CGST)
progress has been made in recent months
and State GST (SGST), and it will have
on a range of issues, including the tax
a far-reaching impact on all sectors of
rates, which are expected to be 12% and
the economy. Originally, the tax was to
20% for goods and 16% for services.
be introduced on 1 April 2010, which

India (continued)
These rates are expected to converge to Any establishment of a person in the
a single rate of 16% within three years of taxable territory and any of that person’s
implementation. establishments in a non-taxable territory
are now treated as establishments
The date of implementation of these
that belong to different persons
changes is not yet available.
(previously, this rule was restricted to an
In the meantime, the service tax regime Indian branch or head office receiving
in India has undergone a major change services from its overseas office).
with effect from 1 July 2012. Service tax An “establishment” is understood to
legislation has moved away from taxation be a business carried out through a
based on classification of services to branch, agency or representative office.
taxation based on a negative list. Now, Accordingly, a branch or establishment
all services provided in the taxable or a representative office in India must
territory are liable to service tax unless be treated as a distinct entity from its
the service is mentioned in the Negative head office or any establishment outside
List of Services. Currently, 17 broad India. Therefore, any service provided or
categories of activities are listed in the received by the head office may attract
Negative List including: services provided service tax in India, depending on the
by the government, trading in goods, place of supply rule for the service.
manufacturing activity, the distribution Specific rules have been introduced
of electricity, interest on loans, advances to determine the place of supply for
and deposits. In addition, a few “taxed” international services. Generally, if the
services have been exempted by way of place of supply is outside India and
specific notifications. the payment is made in a convertible
currency, the services are likely to be
For these purposes, a “service” has been
treated as “exported.” This treatment
defined as any activity carried out by
could allow a refund of input taxes for
one person for another in return for a
related expenses.
consideration. The following activities
have been excluded from the definition: Along with these changes, it is expected
an activity that constitutes merely the that the filing period for periodic service
transfer of title in goods or immovable tax returns will be changed from biannual
property, transactions such as the to monthly or quarterly intervals. The
transfer of a right to use goods that are Central Government has also proposed
deemed to be sales under the Indian integrating the service tax returns and
Constitution, a transaction in money or excise returns.
actionable claim, services provided by an
employee to his employer in the course
of employment, and fees taken by legal
courts or tribunals.
Ireland
With effect from the VAT return period • Supplies of services received into
for January and February 2013, Irish VAT Ireland from other EU member states
registered traders are required to include (contained in a new box ES2)
values pertaining to the following on their
These values were not previously required
VAT returns:
on Irish VAT returns.
• Supplies of services supplied from
Ireland to other EU member states
(contained in a new box ES1)

Ireland (continued)
Along with these VAT reporting VAT56 (formerly VAT13A) certification,
developments, there have been a number which allows qualifying traders to
of recent announcements, publications purchase most goods and services free
and items of legislation that have an from Irish VAT.
impact on Irish VAT, including the
• Along with other EU member states,
following:
Ireland has introduced new VAT
• The 2013 Irish Budget referred to an invoicing rules effective 1 January
increase in the threshold to use the 2013, with the objective of simplifying,
cash receipts basis of accounting for modernizing and harmonizing the
VAT from €1 million to €1.25 million VAT invoicing rules and in particular
with effect from 1 May 2013. eliminating the historical barriers to
e-invoicing.
• The Irish tax authorities have published
important clarifications in terms of the
entitlement of traders to obtain the
Israel
Effective 1 September 2012, the standard The Palestinian Authority and the
VAT rate increased from 16% to 17%. The Government of Israel have concluded
VAT registration threshold is reduced negotiations for arrangements regarding
to annual turnover of LIS76,884 (from the transfer of goods between their
LIS100,000). territories and the related tax clearance
mechanism procedures. Effective
Effective 1 January 2014, an online
1 January 2013, the new indirect taxes
detailed digital report is required for
clearance mechanism (which applies to
all taxable persons, regardless of their
VAT, purchase taxes and import taxes)
level of annual turnover (previously
is based on the actual transfer of goods
this requirement related to taxpayers
between Israel and the Palestinian
with an annual turnover in excess of
Autonomous Areas; previously such tax
LIS2.5 million or that used the double-
clearances were based on the reported
entry bookkeeping system).
transfer of goods. The new measures will
The fine for late submission of a be monitored by a joint team from Israel
mandatory report is increased to LIS212 and the Palestinian Autonomous Areas.
for every two weeks of tardiness (from
LIS204).
Italy
Effective 1 January 2013, the changes invoices. The major change concerns
introduced by the Council Directive electronic invoices. Under the new rules
2010/45/EU, amending Directive electronic invoices and paper invoices will
2006/112/EC with regard to the be placed on an equal footing, and the
rules on invoicing and on cross-border authenticity of the origin, the integrity
transactions, have been implemented in of data content and legibility should be
the Italian VAT law. The most significant preserved from the date of issuance
changes will affect the rules pertaining to the end of the mandatory archiving
to invoicing and the time of issuance of period.

Italy (continued)
• The requirements for content of the • For services supplied to a taxable
invoice have changed as follows: person established in another
EU member state (B2B), invoices
• The invoice must contain a sequential
may be issued by the 15th of the
number.
month following the month of
• The invoice must include the VAT supply; the same rule applies for
number of the customer if the latter services supplied to a taxable person
is a taxable person established established in a non-EU country.
in Italy, or the VAT identification
• The time of supply for intra-Community
number in the EU member state
transactions of goods is the date when
of establishment if the customer is
transport or dispatch from the member
established in the EU, or the fiscal
state of departure starts.
code if the customer is a non-taxable
person resident or domiciled in Italy. • For intra-Community supplies of goods,
advance payments do not trigger
• References to self-billing or to the
a taxable event. The invoice must
reverse-charge mechanism must be
be issued by the 15th of the month
indicated on relevant invoices.
following the month of supply.
• For the purpose of converting
• For intra-Community acquisitions of
foreign currency, the exchange rate
goods, the invoice must be recorded
published by the European Central
by the 15th of the month following the
Bank can be used.
month of receipt but with reference to
• With reference to the issuance of the the previous month.
invoices:
A cash-accounting scheme can be opted
• Invoices must be also issued for for, under specific circumstances, by
transactions that are outside the taxpayers whose turnover is not higher
scope of Italian VAT and, with the than €2 million annually, calculated
exception of exempt financial and with reference to supplies of goods and
insurance transactions, invoices services subject to VAT made to taxable
issued to a taxable person established persons. Under such regime:
in another EU member state should
• For the supplier, VAT is due when it
mention “reverse charge,” while those
is paid by the customer (and in any
issued to taxable persons established
case not later than one year from the
in a non-EU country should mention
date of supply). VAT on purchases is
“outside the scope of VAT.”
recoverable when it is paid.
• For transactions with a consideration
• A VAT payer who purchases goods
not greater than €100 (that may be
or services from a supplier that has
increased up to €400) a simplified
opted for the cash-account regime can
invoice may be issued. However,
deduct the relevant input VAT when the
a simplified invoice cannot be
transaction is deemed to be performed
issued for distance sales and intra-
for VAT purposes, notwithstanding the
Community supplies of goods and
payment has not been made yet.
supplies to taxable persons liable for
the payment of VAT in another EU Effective 1 July 2013, the Italian standard
member state through the reverse VAT rate is due to increase to 22%
charge. from the current 21%. Despite previous
indications, the Government decided
• For services supplied in the same
not to change the provisions related to
month to the same customer, the
the reduced 10% and 4% rates. However,
supplier can issue a single invoice by
depending on the budgetary situation,
the 15th day of the month following
the standard VAT rate increase may be
the month when the transactions
abolished by the new Government, which
were carried out, reporting the detail
will be formed following the general
of each single transaction.
election to be held in February 2013.

Jamaica
Effective 1 June 2012, the GCT standard standard rate including eggs, biscuits,
rate was reduced from 17.5% to 16.5%. flavored milk, condensed milk, animal
At the same time, a number of previously feed and pet food, and live birds and fish.
exempt items became taxable at the
Japan
The consumption tax (CT) rate will Under the current CT regime, a newly
increase from the current 5% (made up established company is generally exempt
of national tax 4% and local tax 1%) to 8% from CT for the first two fiscal years if the
(made up of national tax 6.3% and local company’s registered capital is less than
tax 1.7%) effective 1 April 2014, and to JPY10 million. Under the CT Reform,
10% (made up of national tax 7.8% and a newly established company will be
local tax 2.2%) effective 1 October 2015. subject to CT for the first two fiscal years,
The CT Reform includes a flexible clause regardless of its registered capital to the
that states that the expected consumption extent that a controlling person (e.g.,
tax rate increase may be suspended if the a company holding more than 50% of
increase is not appropriate, given Japan’s equity interest of the newly established
overall economic condition. company) or a related company has
taxable sales in Japan exceeding
The 5% tax rate will continue to apply to
JPY500 million This treatment applies
the transfer of assets on or after 1 April
to companies established on or after
2014 if the transfer is pursuant to a
1 April 2014.
construction contract that was concluded
before 1 October 2013.
Jersey (Channel Islands)

Effective 1 September 2012, a GST As an alternative to GST registration,
Visitor Refund Scheme has been businesses in the financial services
introduced for a 12-month trial period, industry that predominantly serve
with the aim of stimulating sales in the non-resident clients, may opt, upon
retail and travel industries. Refunds are payment of an annual fee, to be listed
available for eligible visitors to Jersey who as International Services Entities
buy items costing more than £300 from (ISEs) to reduce their compliance and
a participating retailer in one day. Goods administrative burden. The annual fee
must be exported within one month may vary, depending on the structure and
of purchase. Supplies of services (e.g., the size of the business.
accommodations, vehicle rentals, catering
or tour services) and the supply of means
of transport, fuel and consumed goods
cannot be included in the scheme.

Jordan
Financial transactions undertaken or As a result of this amendment, all fees
carried out by individuals transferring incurred or paid by individuals relating to
funds out of the Kingdom of Jordan the transfer of funds out of Jordan will be
are excluded from GST exemptions. subject to GST at 16%.
Kenya
During the June 2012 Budget there • Zero rating will apply to the transfer of
were no major amendments in the VAT a business as a going concern.
Act. Instead, the Minister of Finance
• Non-resident suppliers who expect
introduced the VAT Bill 2012, which, at
to make taxable supplies without
the time of writing, is yet to be enacted.
a fixed place of business in Kenya
Since the country is in an election period,
will be required to appoint a tax
any legislative changes are likely to be
representative.
enacted after 1 January 2013. The
proposed key changes in the VAT Bill • The reduced VAT rate of 12% will no
2012 are as follows: longer apply to supplies of electricity
and heavy diesel fuel.
• Registered persons will not be required
to account for reverse charge VAT for • The Cabinet Secretary is empowered to
exempt supplies. vary the tax rate by a maximum of 25%
of the current rate.
• Deduction of input tax previously
restricted (such as on furniture, taxable • Debit and credit notes will be
supplies for use in staff housing, required to be issued within a period
entertainment expenses incurred away of six months (previously this was
from home for business purpose) is now 12 months).
admitted.
• Provisions for VAT remission have been
• Registered persons supplying both abolished.
taxable and exempt supplies will be
• The period for claiming input tax will be
permitted to claim input tax in full if
reduced from 12 to three months.
their exempt supplies constitute less
than 10% of their total turnover. The • Taxpayers will be required to pay 30%
current threshold is 5%. of the amount of tax in dispute before
lodging an appeal to the VAT Tribunal.
• Tax payers may apply to the
Commissioner for extension for a period • Most of the goods that are liable at
of filing their VAT returns. the zero VAT rate will be taxable at the
standard rate. The remaining zero rated
• An appeal will be deemed to be
goods will be moved to the standard
accepted if the Commissioner does not
rate over a transition period of three
respond within 60 days.
years.
• Advance private and public rulings for
• Several organizations will be stripped of
taxpayers were introduced.
their zero-rated status.
• The withholding VAT system will be
• Some exempt goods and services will
abolished.
be taxable at the standard rate. Some
• A certified copy of an original tax of the remaining exempt goods will
invoice will be recognized as valid. become taxable during a transition
period of three years, commencing
• Zero rating will apply to all supplies to
from the date of enactment.
oil and gas exploration companies and
those with a prospecting license.

Latvia
Effective 1 January 2013, a new VAT • Provisions have been adopted relating
Law has come into effect in Latvia. The to small-value gifts and related input
new VAT Law does not change the basic VAT deduction.
principles of the application of VAT;
• An option to tax has been introduced
however, it introduces a new structure to
for the supply of used real estate
the law, provides more detailed regulation
supplied to VAT taxable persons.
in the field of VAT and harmonizes certain
provisions with the EU VAT Directive, • It is now possible to avoid making an
including the following: input VAT adjustment in the case of
theft or loss of goods.
• Amended provisions are introduced
with respect to invoicing, in line with • Amended provisions apply with respect
Directive 2010/45/EU. to the VAT registration requirements
for persons established outside the
• Amended definitions apply for certain
territory of the EU.
terms, to comply fully with by Council
Directive 2006/112/EC on the • The law specifies certain cases when
common system of VAT (such as the VAT registration is not obligatory.
definition of taxable person, business
• A tax representative must be appointed
activities, intra-Community supply
for VAT purposes for any person
and acquisition of goods, taxable
from outside the EU applying for a
value, self-consumption and triangular
VAT registration in Latvia. Direct VAT
transactions).
registration by non-EU traders is not
• Amended provisions apply with allowed.
respect to input VAT deduction.
Partially exempt taxable persons
must apply separate VAT accounting
to allocate input tax to taxable and
exempt supplies. The use of a pro-rata
calculation is allowed only in cases
where separate accounting cannot be
introduced.
Lithuania
The Lithuanian Law on VAT has been approved by the Ministry of transport
amended with respect to invoicing, in or other competent authority. A 5%
line with the provisions of EU Directive reduced VAT rate applies to technical
2010/45/EC. These changes entered into support for disabled people.
effect on 1 January 2013. The Lithuanian
• Taxable persons who are not registered
law does not differ substantially from the
for VAT purposes can recover input VAT
directive, and there are no major local
incurred on the acquisitions of goods
provisions.
and services prior VAT registration if
Effective 1 January 2013, the following the goods and services are used for
changes apply: taxable activities.
• A 9% reduced VAT rate applies to • Input VAT may be recovered on services
supplies of newspapers, magazines and goods acquired before an entity
and other periodicals, as well as to was registered as a VAT payer. Special
passenger transport on regular routes rules and procedures apply.

Lithuania (continued)
Effective 1 March 2013, the Lithuanian deduction is granted by the Lithuanian tax
tax authority will control payments of VAT authority. Effective 1 March 2013, import
on imports and the postponed accounting VAT will be calculated by the Lithuanian
system for imports made by taxable customs authority, but the import VAT
persons will come into full operation. Until payable will be included in the VAT return
1 March 2013, the import VAT calculation and may be deducted, subject to the
and settlement are controlled by the general principles of VAT deduction, in
Lithuanian customs authority. Any import the same taxable period.
VAT has to be paid to the Lithuanian
customs authority, whereas import VAT
Luxembourg
Effective 1 January 2013, in line with VAT payers, including non-resident
article 4 of Directive 2008/8/EC and VAT payers, who are required to file
Directive 2010/45/EU, new rules on Luxembourg VAT returns on a monthly or
invoicing apply. At the time of writing, quarterly basis, must submit all their VAT
the law implementing the invoicing returns and EC sales listings for goods
directive has not yet been voted on by the and services using the Luxembourg VAT
Luxembourg Parliament; therefore, the authorities’ electronic portal (known as
new rules are not yet implemented into “eTVA”). Therefore, these VAT payers
the Luxembourg VAT law. However, we are no longer permitted to file reports
anticipate that once the vote has taken in hard copy. This obligation applies to
place, the law will apply the new rules returns and EC sales listings relating
retroactively. to periods after 31 December 2012.
However, electronic filing is not obligatory
for taxpayers who file VAT returns on an
annual basis.
Macedonia
VAT return forms and the tax balance Small shipments sent from abroad by
sheet must be submitted electronically. individuals, as well as shipments of
For taxpayers who file VAT returns small value delivered from abroad, are
monthly, this change applies with effect exempt from VAT if the total value of the
from 1 January 2013; for taxpayers who shipment is €22 or less. This exemption
file VAT returns monthly, this change will does not apply to tobacco and tobacco
apply with effect from 1 July 2013. products, alcohol and alcoholic beverages,
or perfumes and related products.
Malta
Effective 1 January 2013, in line with The VAT exemption for diesel purchased
article 4 of Directive 2008/8/EC and by fishermen for fishing purposes will be
Directive 2010/45/EU, new rules on extended to 2013.
the place of supply of hiring of means of
transport and pleasure boats and new
rules on invoicing have been implemented
in the Maltese VAT legislation.

Mauritius
Effective 1 April 2013, the annual VAT • Colostomy bags and disposable urine
registration threshold will be MUR4 million bags
instead of MUR2 million. VAT registration
• Entrance fees to cinemas, concerts and
is mandatory for persons who make
shows
supplies listed in the Tenth Schedule
to the Value Added Tax Act 1998 (for • Cinematographic films, including
example, consultancy), irrespective of the royalties
level of their yearly turnover of taxable
Effective 21 December 2012, the
supplies, so they are unaffected by this
exemption for goods imported by post
measure.
with (under item No. E11) has been
The transitional provisions provide that increased from MUR1,000 to MUR2,000.
if a person ceases to be registered on From the same date, the exemption on
1 April 2013 on the grounds that its health services has been extended to
annual turnover of taxable supplies does residential care home services providers
not exceed or is not likely to exceed registered with the ministry of social
MUR4 million, any excess VAT on the security.
VAT return for the last taxable period will
The scope of the exemption has also
not be refundable. Instead, it will be be
been extended to any improvement or
deemed to be VAT on trading stocks held
repairs of a capital nature for the National
and it cannot be carried forward as a VAT
Housing Development Company Ltd.
credit.
The tax authorities must make refund
When a taxable person ceases to be
of VAT within seven days of the date of
registered for VAT, it must account for
receipt of a claim for a repayment and the
output tax on all goods forming part
VAT return, provided that all the following
of the assets of the person held at the
conditions are satisfied:
time that the registration is canceled.
This provision now extends to vehicles, • The claim relates to fittings, equipment
vehicle spare parts and accessories, and furniture (the “relevant assets”)
including motor cars and other motor used in a shop, restaurant or other
vehicles for the transport of not more retail outlet but should not be used by a
than nine persons, motorcycles and supermarket or hypermarket.
mopeds, for own use or consumption.
• The relevant assets must be acquired by
Output tax should be accounted on these
the person.
assets, even though the input tax was not
claimed on their acquisition. This measure • The relevant assets must be used for
effectively repeals an amendment made the purpose of a renovation.
in 2002.
• The VAT should be at least
The requirement to keep and maintain MUR10 million.
business records for a minimum period
• The status of the purchaser should be
of one year no longer applies if a person
confirmed by the Board of Investment.
wants to register for VAT on a voluntary
basis. • The claim for repayment and return
should reach the tax authorities on or
Effective 25 October 2012, minted gold
before 31 December 2014.
bars imported, purchased or offered for
sale by the Bank of Mauritius are exempt Any taxable supply made by a holder
from VAT. The following supplies are also of a freeport certificate to a person in
exempt from VAT effective 10 November Mauritius outside the freeport zone will
2012: be deemed to be imported goods and VAT
will be chargeable on the goods.
• Food preparations for infant use put up
for retail sale (H. S. Code No. 1901.10)

Mauritius (continued)
The refund provision for non-taxable The scope of the VAT refund scheme
persons has been amended so that introduced in 2011 has been widened as
the VAT on defective goods can still be follows:
claimed as a refund even if the goods
• The qualifying asset should be
have not been subsequently exported
purchased or acquired by 31 December
under customs control. Furthermore,
2013, instead of 31 December 2012.
the amending laws provide that the
refund will apply if the goods have been • For the year ending 31 December
damaged, pilfered, lost or destroyed 2013, the scheme has been extended
during the voyage. Also, if the goods have to a baker, other than a hypermarket
been ordered to be destroyed as being or supermarket. The qualifying assets
unfit for consumption the refund can still dough mixer, dough hopper and pre-
be claimed. A refund is also possible in portioner, dough divider.
the event that the goods are found to
be defective, obsolete or not according
to specifications and are subsequently
exported in accordance with section
23(1A) of the Customs Act.
Moldova
Effective 1 January 2013, the following • The VAT rate for natural gas and
changes apply to the VAT law: liquefied gas has increased from
6% to 8%.
• The VAT exemption granted for fixed
assets contributed into the share capital • Specific mechanisms related to VAT
of a company no longer applies. refunds have been approved for
supplies of crops, horticulture and
• The VAT rate for supplies of sugar
animal production, as well as for capital
beet, natural crop and horticulture and
investments related to motor vehicles
animal production has increased from
for the transportation of people.
8% to 20%.
Netherlands
Effective 1 October 2012, the Dutch VAT In accordance with EU Directive 2008/8/
rate increased from 19% to 21%. The VAT EC, effective 1 January 2013, the place
rate for theatre and concert tickets has of supply for the long-term hiring of
been reduced to 6%. means of transport to a non-taxable
person is the place where the customer
Effective 1 January 2013, changes apply
has its establishment. However, the place
to the rules for invoicing requirements.
of hiring a pleasure boat to a non-taxable
For example, it is now compulsory to
person is the place where the pleasure
include the standard term “btw verlegd”
boat is actually put at the disposal of the
on invoices if the reverse charge applies
customer, where this service is actually
(i.e., in cases where the customer is liable
provided by the supplier from his place
for the payment of the VAT).
of business or fixed establishment in that
place.

New Zealand
Effective 4 June 2012, the administrative amendment is to allow transparency for
penalties regime under the Customs and activities carried on by non-residents in
Excise Act 1996 has been extended. New Zealand.
GST errors are now liable for penalties
• For the purpose of calculating input
under this regime. A graduated system
tax recovery, the new rules require
of penalties now applies, ranging from
non-residents to treat their worldwide
NZD200 to NZD50,000.
supplies as if they were made and
The Taxation (Livestock Valuation, Assets received in New Zealand. Accordingly,
Expenditure, and Remedial Matters) a non-resident’s ability to claim input
Bill was introduced on 13 September tax depends on the proportion of its
2012. The bill contains proposed GST supplies that would be subject to GST
amendments that are intended to allow under New Zealand’s domestic GST
non-resident businesses to register and system, compared with the non-
claim input tax deductions in a broadly resident’s total worldwide supplies.
similar manner to a comparable New
• The following remedial changes are also
Zealand resident business. Remedial
proposed:
changes also apply. The proposed
amendments relevant to non-residents • Non-residents may only register for
include the following provisions: GST on a payments basis. This is to
prevent input tax being claimed on
• Currently, GST input tax is recoverable
the basis of an invoice on which no
if a non-resident is making taxable
payment is made.
supplies in New Zealand and is
registered for GST. New rules are being • The Inland Revenue can hold GST
introduced to allow a non-resident refunds for up to 90 days to establish
to recover input tax credits without whether a refund claim is valid. The
having to make taxable supplies in New current time frame is up to 15 days.
Zealand. They are expected to come
• The Commissioner is not required to
into effect on 1 April 2014. The ability
pay “use of money” interest on any
to recover input tax is subject to the
GST refunds held during the 90-day
following conditions:
period.
• The non-resident is registered for a
• The Commissioner is given powers
consumption tax in their country of
to deregister non-residents under
residence.
specific circumstances (e.g., non-
Or compliance).
• If no consumption tax system is in • Effective from the date of enactment
place, the non-resident carried on of the bill, a proposal has been made to
a taxable activity offshore with a effectively allow an agent to opt out of
turnover exceeding NZD60,000. the agency rules and treat the supplies
received and made on behalf of the
• The input tax in New Zealand for the
principal as being received and made
first period of registration is more
by the agent in a principal capacity.
than NZD500.
This means that two tax invoices can be
• The services are not received in New issued for a supply made by an agent on
Zealand by non-registered persons. behalf of the principal (one invoice from
the principal to the supplier, and another
• It is proposed to disallow GST
from the agent to the customer). The
grouping for non-residents grouped
principal will declare output tax with
with resident companies, effective
respect to the tax invoice issued to the
13 September 2012 (the date
agent, and the agent will declare output
of the introduction of the bill).
tax with respect to the tax invoice to
The Commissioner has powers to
the recipient and claim input tax with
retrospectively split GST groups into
respect to the output tax charged by the
resident and non-resident entities
principal.
after this date. The purpose of the

Nicaragua
The revised Tax Law (822 (Ley de • Exports of services and locally produced
Concertación Tributaria) was published goods are zero-rated (0%).
in the Official Gazette No. 241, dated
• If a service is rendered or the use or
17 December 2012. This new law came
enjoyment of goods is provided or
into force on 1 January 2013. The
granted by a resident individual or
most important VAT changes can be
legal entity that is not a VAT payer, the
summarized as follows:
taxpayer is required to apply a VAT
• Taxable events include the sale of withholding.
goods, the import and nationalization
• Financial services are exempt from VAT,
of goods, the exports of goods and
including services directly related to
services, and the rendering of services
finance, including interest derived from
and the use or enjoyment of goods.
financial leasing agreements.
• The standard rate of VAT is 15%.
Nigeria
Effective 1 January 2013, a zero-rate used in the solid minerals sector. This will
VAT applies to imports of commercial take effect subject to the administrative
aircrafts and aircraft spare parts and to and legislative processes required to pass
imports of machinery and equipment the amendment into law.
Norway
Effective 1 January 2013, the following • The VAT zero-rating for the supply of
changes apply: services relating to public roads and
railways has been abolished.
• Foreign entrepreneurs providing
transport services directly to and from
Norway are not obliged to register for
VAT, but they are entitled to receive
a refund of VAT paid on purchases of
goods and services in Norway.
Palestine
The Palestinian Authority increased the the standard VAT rate decreased from
standard VAT rate from 14.5% to 15.5% 15.5% to 15% effective 1 October 2012.
effective 1 September 2012. However,

Panama
Law 52 of 2012 deems a number of agricultural or agro-industrial sector with
domestic taxpayers to be similar to revenues greater than US$300,000.
exporters and allows them similar Input VAT was previously an expense for
privileges for input tax deduction. This these taxpayers; as they do not charge
applies to taxpayers whose business is VAT on their sales they could not offset
to manufacture food, pharmaceutical or VAT charged on expenses. However, these
medical products for human consumption, entities may now take the input VAT and
as well as entities dedicated to the credit it against income tax installments.
Paraguay
Effective 1 November 2012, companies • File a monthly tax return, including
have been designated as withholding information related to purchases, sales
agents for VAT purposes. These taxpayers and taxes withheld
must do all of the following:
• Report the information electronically
• Withhold and pay VAT
• Issue vouchers for the tax withheld
Peru
Effective 1 August 2013, the transfer amendment, price adjustments due to the
pricing rules will no longer apply for application of transfer pricing methods do
VAT purposes. For unclear or doubtful not determine the fair market value for
transactions between related parties, VAT purposes. This is a major change as
the tax administration may adjust the the transfer pricing rules were applicable
amounts of the transactions considering for income tax and VAT purposes since
the fair market value. However, under the they were introduced in 2001.
Philippines
On 31 October 2012, the Bureau • In applying the threshold, a husband
of Internal Revenue issued Revenue and wife are considered to be separate
Memorandum Circulars (RMC) No. 64– taxpayers; however, each taxpayer’s
2012. The main provisions of RMC No. income is aggregated.
64–2012 include the following measures:
• A professional who is not registered for
• In addition to income and withholding VAT is liable to the percentage tax at a
taxes, a professional person is liable rate of 3% if his gross receipts for the
to VAT of 12% if his gross receipts past 12 months were equal to or below
or professional fees for the previous the threshold. If the professional is VAT-
12 months exceed PHP1,919,500 or if registered, then he is liable to VAT upon
gross receipts for the next 12 months VAT registration and the percentage
will exceed this threshold. tax does not apply, regardless of the
amount of gross receipts.

Poland
A number of VAT law changes apply for of goods that are to be exported to the
2013. Many of the changes are aimed territory of another EU member state
at aligning the Polish VAT law with EU (transit arrangements) to appoint a VAT
legislation. representative in Poland.
Effective 1 January 2013, the changes • Favorable changes have been made to
include the following measures: the conditions for zero-rating intra-
Community supplies.
• The provisions concerning the bad debt
allowance have been amended to speed • New rules apply for the taxation of
up payments for goods and services. down payments in exportation. The
Polish VAT law stipulates that, as a
• Down payments received for VAT-
general rule, domestic supplies of
exempt intra-Community supplies of
goods performed by businesses not
goods are not taxable.
established in Poland fall under the
• Electronic invoicing may be used if reverse charge rules if the supply
business controls create a reliable audit is made to another taxable person
trail between the invoice and the supply established in Poland. Under the
of goods or services. current provisions, the reverse charge
still applies if the supplier is established
• Self-invoicing rules have been simplified
outside Poland but has a Polish VAT
and third-party billing rules have been
number. Under the new rules, the
introduced.
supplier cannot register for VAT
• The exchange rate of the European purposes in Poland to apply the reverse
Central Bank may be used for foreign charge. In other words, if the foreign
currency invoices. supplier is VAT-registered (for whatever
reason), it will not be able to apply the
• Simplified VAT invoices may be issued if
reverse charge scheme to domestic
the value of the supply does not exceed
supplies of goods in Poland.
€100 or PLN450.
• Based on the amended wording of
Effective 1 April 2013, the changes
the VAT Act, in chain transactions the
include the following measures:
delivery conditions of the supply will
• The definition of the terms be decisive when transport is allocated
“importation” and “exportation” have to one of the supplies. In particular,
been amended to reflect Poland’s for example, it will be clear that if
membership in the EU. the Incoterm “ex works” is used, any
foreign entity participating in the supply
• New definitions of the terms “building
will be required to register for VAT in
premises” and “samples” have been
Poland.
introduced to ensure conformity with
the EU VAT Directive. • The VAT exemption for non-public
postal services provided by Poczta
• New rules for reverse-charged supplies
Polska has been abolished. These
of goods will be introduced.
services will be subject to the standard
• The definition of the term “taxpayer” VAT rate of 23%.
has been amended to reflect EU law
• The VAT rate for arts and crafts has
• Slight changes apply to the rules that increased from 8% to 23%.
define the conditions for appointing
Further substantial VAT law changes are
a VAT representative, his functions,
expected to come into effect on
etc. Additionally, an option has been
1 January 2014.
introduced for non-resident importers

Portugal
Effective 1 January 2013, a number of • The VAT invoice is now recognized as
changes apply aimed mainly at aligning the only valid document permitted to
the VAT law to EU directives and at support any taxable transaction, for
combating tax evasion. The changes VAT purposes.
include the following measures:
• A new rule aimed at combating VAT
• The place of supply for hiring of means fraud and evasion allows certain
of transport, other than a short-term taxpayers to deduct, personal income
hiring, supplied to non-taxable persons tax purposes, 5% of the VAT incurred
is the place where the customer is on certain expenses by any member
established, has his permanent address of the household, up to global limit of
or usually resides. €250. Initially, the VAT paid must relate
to certain business sectors (e.g., the
• The time of supply for intra-Community
maintenance and repair of cars and
supplies of goods carried out
motorcycles, hotel and restaurant bills
continuously for a period exceeding one
and hairdressing). This tax incentive
month is the end of each month.
may be extended in the future to other
• The use of electronic invoicing by business sectors.
taxable entities has been simplified
• Moreover, effective 1 January 2013, all
by allowing methods other than the
Portuguese taxpayers (i.e., Portuguese
advance electronic signature, or the EDI
companies, or foreign companies with a
system.
permanent establishment in Portugal)
• The rules have been standardized must communicate by electronic means
at the EU level for the elements and to the Portuguese Tax Administration
comments that must be included on relevant data of the invoices issued
VAT invoices; consequently several during a particular month, at the latest
changes have been introduced in on the 25th day of the subsequent
Portugal regarding the content of month.
invoices.
• Finally, important changes have been
• A maximum deadline for the issuance of introduced regarding the procedure for
invoices for intra-Community services if recovering the VAT on bad debts. In
VAT is due in the member state of the particular, for credits overdue effective
acquirer has been introduced. In these 1 January 2013, it will be possible
cases, the invoice must be issued at to recover the VAT related to debts
the latest by the 15th day of the month for taxable operations that grant the
following that in which the taxable right to deduction regardless of the
event occurs (when the service was amount of the debt and provided that
rendered). the debt is overdue for at least 24
months. In this case a certificate issued
• Simplified invoices may be used for
by an Official Chartered Accountant
supplies of goods made by retailers to
is required, and the taxpayer must
non-taxable persons, if the amount of
submit an authorization request to the
the invoice is less than €1,000, and for
Portuguese Tax Administration before
other supplies, goods and services if
performing the VAT adjustment.
the amount does not exceed €100. An
invoice must be issued for all supplies
of goods or services made in the
Portuguese territory (regardless of the
acquirer’s VAT status).

Romania
Effective 1 January 2013, a cash • The VAT cash accounting scheme is
accounting regime has been introduced. mandatory for qualifying persons and
Taxable persons (i.e., persons who are should not be applied by:
VAT-registered in Romania and have their
• Taxable persons that are part of a
place of economic activities in Romania)
VAT group
with a turnover of RON2,250,000 or
less in the previous calendar year must • Taxable persons not established
account for VAT at the time of payment in Romania that are registered in
for the supply (on the cash basis), but no Romania for VAT purposes directly
later than 90 days after the invoice date, or through a fiscal representative
if the consideration is not paid. Input VAT
• Taxable persons that have the
may be deducted only when invoices are
seat of their economic activity
paid (this deduction rule applies both to
outside Romania but have a fixed
persons that apply this scheme and to
establishment in Romania
persons that do not apply it but make
acquisitions from persons that apply the • Certain operations (e.g., supplies of
scheme). Details of the cash accounting goods or services that are exempt
scheme include the following: from VAT, supplies of goods or services
between related parties, and certain
• Cash accounting applies to taxable
supplies of goods or services paid in
persons registering for VAT in the
cash) are excluded from the application
current year and taxable persons who
of the VAT cash accounting scheme.
did not apply the VAT cash accounting
scheme during the previous year but • Specific rules apply to invoices issued
who have exceeded the threshold of by taxable persons prior to entering
RON2,250,000 during the current or exiting the VAT cash accounting
year. Also taxable persons whose scheme, as well for adjustments to the
turnover incurred during the period taxable base.
1 October 2011 to 30 September 2012
• Invoices issued under the VAT cash
was below the threshold must apply
accounting scheme must state the term
the VAT cash accounting scheme as of
“cash accounting.”
1 January 2013.
• The purchaser of goods or services for
• The turnover for computing the
which the supplier applied the cash
RON2,250,000 threshold is made up
accounting scheme may deduct the
of the total value of taxable supplies of
related input VAT no earlier than the
goods or services, and VAT exempt with
date of VAT payment to the supplier.
credit supplies, including transactions
An official register has been created by
for which the place of supply is deemed
the Romanian Tax Authorities listing
to be located abroad, carried out during
taxable persons that apply the VAT cash
one calendar year.
accounting scheme.
• If the taxable person fails to collect
Effective 1 January 2013, the place of
the full face value of the invoice issued
supply of the long-term rental of means of
within 90 calendar days from the issue
transport to a non-taxable person is the
date, the tax point occurs on the 90th
place where the lessee has his domicile or
calendar date following the issue of the
usually resides.
invoice for the unpaid amount.

Romania (continued)
The system, which allows importers • Small value gifts granted free of charge
(taxable persons registered for VAT do not represent deemed supplies of
purposes in Romania) who have a goods for consideration, and no VAT
deferred payment license issued should be self-assessed in this respect
by the Romanian tax authorities to if the value of each gift is less than
avoid payment of VAT to the custom RON100 (around €23).
authorities at the time of importation
• Taxable persons may issue simplified
(postponed accounting), is extended until
invoices under certain conditions (e.g.,
31 December 2016. This measure was
if the invoiced amount does not exceed
originally due to end on 31 December
€100, or if the invoiced amount ranges
2012.
between €100 and €400 and there are
Effective 1 January 2013, the EU VAT administrative or commercial practices
Directive invoicing rules have been within that industry that make regular
implemented into the Romanian VAT law: invoicing extremely difficult).
• For supplies of goods and services or Effective 1 February 2013, the following
advanced payments for supplies of changes apply:
goods or services (other than intra-
• The market value for VAT purposes
Community supplies of goods), the
has been introduced for transactions
invoice must be issued by the 15th day
between related parties, in the following
of the month following the month when
cases:
the taxable event took place or the
advance was paid (unless an invoice has • If the consideration for the supply is
already been issued). less than the market value and the
beneficiary is not fully entitled to
• The obligation to issue invoices for
input VAT recovery.
down payments received for VAT
exempt intra-Community supplies of • If the consideration for the supply
goods is eliminated (issuing an invoice is less than the market value, the
is now optional in this situation). supplier is not fully entitled to input
VAT recovery and the supply is VAT
• No invoice should be issued for exempt
exempt without credit.
financial and insurance transactions.
However, if the exempt financial and • If the consideration for the supply is
insurance services are supplied to non- higher than the market value and the
EU recipients, an invoice must be issued supplier is not fully entitled to input
(due to the fact that such supplies are VAT recovery.
VAT exempt with credit).
• The supply of rights in rem in
• For invoices issued by non-EU suppliers, immovable property,
the authenticity and integrity of
the content of the invoice should
be ensured exclusively either by an
advanced electronic signature or
the electronic data exchange (EDI)
procedure.
• For foreign currency invoices,
taxpayers may use the exchange rate
communicated by the National Bank of
Romania, the European Central Bank
or used by the bank through which the
settlements are made, valid at the date
when the tax point occurs.

Saint Lucia
The Prime Minister of Saint Lucia for domestic consumption and exports
announced the introduction of a VAT of goods including electricity, fresh eggs,
regime effective 1 October 2012. The water, uncooked pasta and exported
VAT replaces a range of taxes, such as goods.
consumption tax, mobile cellular phone
VAT-exempt supplies include residential
tax, hotel accommodation tax, motor
leases, education, financial services,
vehicle rental fee and environmental
insurance, medical services, local
protection levy.
transportation, postal and religious
VAT registration applies to businesses services, and certain food items.
with an annual turnover of XCD180,000
To cushion the impact of VAT, import
(roughly US$66,000) or more.
duties will not be levied on medicines
The standard rate of VAT is 15%. A for a four-year period from 1 May
reduced rate of 8% applies to the hotel 2012 (retroactively) to 30 April 2016.
sector and to related services until Previously, import duty was levied on
30 April 2013. The zero VAT rate applies medicines at a rate of 10%.
to certain essential goods and services
Saudi Arabia
The Ministry of Commerce and Industry certificates. Violators will be subject to
has emphasized the need for all fines up to SR100,000, which may be
businesses and stores to use Arabic on doubled in the case of repeated violations.
all invoices, in contracts and on warranty
Serbia
Effective 1 October 2012, the standard The Serbian government has announced
VAT rate increased to 20% (from a reduction in the period that taxpayers
18%). The VAT registration threshold must wait for a refund of a VAT credit.
is increased to RSD8 million (from The waiting period is decreased to
RSD4 million). 30 days from 45 days for general
companies and to 10 days from 15 days
Effective 1 January 2013, small
for frequent exporters. Effective
and medium-sized enterprises (i.e.,
5 January 2013, all companies that
enterprises with an annual turnover of
export more than 50% of their production
less than RSD50 million) have the option
are classified as “frequent exporters”
to pay VAT after they have received
(previously, the threshold was 70%). The
payment.
tax administration will be liable to pay
interest on delayed tax reimbursements
at the same rate of penalty interest
that applies to taxpayers for late
payments VAT.

Seychelles
A VAT has been introduced effective basis. Exempt transactions include
1 January 2013. VAT applies at a rate of basic commodities and services, rice,
15% for taxpayers whose annual turnover meat, fruit and vegetables, cooking oil,
is SR5 million or more. Businesses whose pharmaceuticals, infant food and formula,
annual turnover is less than SR5 million electricity, water and petroleum.
are subject to VAT on a voluntary
Singapore
Effective 1 October 2012, the importation • The “series of gifts” condition has been
and supply of investment precious metals removed. A GST-registered business no
(IPM) in Singapore are exempt from GST, longer has to track the number of gifts
while the supply of IPM that is exported given to a single person. It now only
continues to be zero rated. Only precious needs to account for output tax on a
metals in the form of a bar, ingot, wafer deemed supply if the cost of each gift
and coin that meet certain prescribed exceeds SGD200.
conditions can qualify as IPM. The supply
• A GST-registered business is required
of precious metals that do not meet the
to account for output tax on a deemed
qualifying conditions (such as jewelry,
supply if the business has been allowed
scrap precious metals, numismatic coins)
to claim the input tax for the goods in
continues to be taxable.
question. Hence, if a GST-registered
Effective 1 October 2012, the Singapore business chooses not to claim the GST
tax authority has eased the requirements incurred on the goods, it is not required
for deemed supplies and for the output to account for the deemed supply
tax payable by GST-registered businesses and the output tax payable when it
in relation to goods given away free (gifts) subsequently gives the goods away or
or put to private use as follows: makes them available for private use
for free.
Slovak Republic
Effective 1 October 2012, considerable Stricter rules apply when the
changes were introduced to the transportation of the goods is arranged
documentary proof required for VAT by the supplier or customer directly.
zero rating for intra-Community supplies The supplier has to have a document
of goods. These changes affect all confirming the acquisition of the goods
businesses that make cross-border sales by the customer. The confirmation must
of goods from the Slovak Republic to include the customer’s details (name,
another EU member state. According to seat and place of business), a description
the new rules, if the transportation of of the goods supplied and their amount,
the goods is arranged by a third party, the place and date when the goods
the supplier has to have a CMR (or other were delivered to the customer (if the
document) confirmed by the customer or transportation is performed by the
its representatives. supplier), the place and date when the

Slovak Republic (continued)
transportation ended (if it is performed • Compulsory VAT registration applies for
by the customer), the name surname taxable persons supplying real property
and signature of the driver, and the (buildings). VAT registration must take
registration number of the vehicle place by the date of the supply or the
involved. As these requirements are date of any payment prior to such
much stricter than applied previously, supply.
taxpayers should review their current
• The scope of the reverse charge
documentation practices and assess
mechanism has been extended to
whether they comply with the new rules.
cover supplies of real estate and the
Effective 1 October 2012, as an anti- exercise of a lien and of an assignment
fraud measure, the law extends the range of a right, if ownership of goods is
of situations when the customer is liable transferred.
for settling the output VAT on behalf of
• Foreign entities registered for VAT that
the supplier. The customer of goods or
supply goods and services subject to
services supplied in the Slovak Republic is
the reverse charge mechanism can
liable for settling the output VAT due for
no longer recover input VAT through
the transaction (i.e., the amount stated
a Slovak VAT return. They must now
on the invoice) if he knew or should have
recover input VAT through the VAT
known that the output VAT (or part of
refund procedure.
it) would not be paid by the supplier to
the tax authorities. Indicators that the • The tax authorities may deregister
customer was in such a position include a VAT registered person who fails to
the following: comply with administrative duties (e.g.,
filing of VAT returns, payment of tax,
• The consideration agreed for a
tax-audit-related duties.
transaction is inappropriately high or
low without economic justification. • Dealers of second-hand cars that
purchase vehicles from abroad from
• The customer has continued to enter
VAT-registered persons for onward sale
into transactions with a supplier
in the Slovak Republic must submit
included on the “black list” published by
special records with their VAT returns.
the Slovak Financial Directorate.
Effective 1 January 2013, the following
• A member of the board of the customer
changes apply:
was also a member of board of the
supplier at the time of the tax point for • The acceptance of electronic cash
the transaction. register receipts for the purposes of
evidence of VAT paid will be limited
If any of these conditions is met, the
to the cash payments up to €1,000
customer has the obligation to pay the
(including VAT) and, in the case of
VAT due for the related transaction to
payment by electronic means, up to
the tax authorises. The tax authorities
€1,600 (including VAT).
are also authorized to use the
customer’s excess VAT deduction to • Paper and electronic invoices are
settle the VAT due. treated equally. According to the new
rules, the taxpayer is free to decide
Also effective 1 October 2012, the
on which electronic format the invoice
following changes apply to the Slovak VAT
will take, as long as the authenticity of
legislation:
the origin, integrity of the content and
• Compulsory interest-free collateral legibility of the invoice can be ensured.
must be provided at the time
of registration (from €1,000 to
€500,000), in specific cases.

Slovak Republic (continued)
• A taxpayer who makes intra-Community permanent address or usually resides
supplies of goods or reversed-charged unless the hiring involves a pleasure
services should issue an invoice by the boat, in which case place of supply is
15th day of the month following the where the pleasure boat is actually
month when the supply was performed. put at the disposal of the customer
providing that it is also the place of his
• For continuous intra-Community
seat or fixed establishment.
supplies of goods that exceed one
month, the tax point is the last day of Effective 1 January 2014, the reverse
each calendar month. charge mechanism will apply to the
importation of goods (i.e., postponed
• The place of supply of long-term hire
accounting will be available for imports).
of means of transport supplied to a
non-taxable person is the place where
the customer is established, has its
Slovenia
The standard VAT rate will be increased in which the increase applies and will
up to 3% if the budget deficit for 2013 be rounded to 0.5%. The VAT rate will
and 2014 exceeds 3% of the Slovenian be published by the latest on 15 March
GDP. The possible increase will be in force in the Official Gazette for the relevant
from 1 April to 31 December of the year calendar year.
South Africa
The VAT Act provides that a vendor If a non-resident regularly or continuously
should issue a debit or credit note if a supplies goods that enter South African
supply has been canceled, a supply has territorial land and waters, it may be
been changed, the agreed consideration required to register for VAT, irrespective
has been adjusted or the goods have of whether it has a permanent
been returned. It is proposed that the establishment in South Africa. The VAT
conditions under which a debit or credit Act currently provides for the supply of
note may be issued be extended to allow goods by a non-resident to be exempt
for the correction of incorrect invoices from VAT if the goods are imported and
and also other circumstances such as the entered for storage in a licensed bonded
correction of invoices where particulars warehouse. It is proposed that the VAT
on the tax invoice are missing. exemption for in-bond sales should be
extended to supplies made by a non-
resident if the goods are supplied before
their entry for home consumption.

South Korea
Effective 1 January 2013. debt collection
services are no longer exempt from VAT.
Spain
Effective 1 September 2012, the standard • Omissions or mistakes in the VAT
VAT rate increased to 21% from 18% and return declaring the self-assessed VAT
the reduced VAT rate increased to 10% arising from the withdrawal of goods
from 8% . However, the 4% super-reduced from a VAT warehouse may be subject
VAT rate has remained unaltered. In of a penalty of 10% of the VAT amount
addition, some goods and services that for missing, incomplete or inaccurate
were formerly taxed at the reduced rates declarations, provided that the declared
are now taxed at the standard rate. VAT is lower than the amount actually
accrued.
Effective 31 October 2012, the following
changes apply: Effective 1 January 2013, in according
with EU Directive 2010/45/EU, the tax
• Following several judgments made by
point for an intra-Community supply
the Supreme Court, the Spanish VAT
and acquisition of goods is the earlier of
Law has been amended so that, in the
the 15th day of the month following the
case of bankruptcy, a clear distinction
month when the goods were removed
is made on the VAT returns between
from the supplier or the date when
VAT amounts relating to operations
the invoice is issued. The tax point for
with tax point dates prior to the
continuous intra-Community supplies of
bankruptcy (which are subject to the
goods looking for a period of more than
legal bankruptcy payment rules) from
one calendar month, where payments
VAT amounts relating to operations
have been agreed for a period longer
made subsequent to the bankruptcy
than the month, is the last day of each
(which must be declared and paid in the
calendar month.
normal way, through the periodic VAT
return process). A new invoicing regulation (based on
EU Directive 2010/45/EU) entered
• The reverse charge procedure has
into force effective 1 January 2013.
been extended for certain supplies to
The new regulation clarifies when
immovable property, The VAT reverse
non-resident entities must comply with
charge procedure now applies to most
Spanish invoicing regulations. The new
sales of buildings (except for sales
rules also require that tax receipts be
of new or substantially renovated
replaced by simplified VAT invoices, they
buildings). In addition, the VAT reverse
also provide for electronic invoicing. For
charge procedure applies to certain
intra-Community supplies and, in all cases
services related to the construction or
where the recipient is an entrepreneur,
substantial renovation of immovable
invoices must be issued by the 15th day
property.
of the month following the month when
the goods were supplied or the services
were performed.

Sri Lanka
On 8 November 2012, the Sri Lankan to wholesale and retail businesses
Government presented the Budget for with a quarterly turnover in excess of
2012–13. Effective 1 January 2013, LKR500 million and to exempt from NBT
it is proposed to extend the scope of and VAT small businesses with an annual
the Nation Building Tax (NBT) and VAT turnover of less than LKR12 million.
Sweden
Effective 1 January 2013, in accordance at the latest by the 15th day of the
with EU law, a number of changes apply month following the supply of goods or
to the to VAT invoicing, including the services.
following measures:
• The authenticity of the origin, the
• The relevant law or other information integrity of the content and the legibility
must be expressly mentioned on an of an invoice must be ensured by the
invoice that relates to a VAT-exempt issuer and the recipient until the end for
supply. the storage period of the invoice (seven
years).
• Any invoice issued by the purchaser
under a self-billing arrangement must Effective 1 January 2013, a number of
expressly mention on the invoice that other changes apply to the Swedish VAT
self-billing applies. law, including the following measures:
• The words “reverse charge” must be • To prevent fraud, the reverse charge
mentioned on any invoice subject to applies to supplies of waste and scrap
the reverse charge. If the invoice is for certain metals.
issued in Swedish, the words “Omvänd
• A penalty of SEK500 is imposed for
betalningsskyldighet” must be included.
all VAT returns that are filed late.
• Taxable persons who apply a profit Previously, the penalty amount was
margin scheme for second-hand goods, raised to SEK1000 if one of the three
artwork, collectibles and antiques or the preceding returns was filed late.
margin scheme for travel agents and
• Interest on all late payments of VAT is
travel agencies may simply express the
now calculated using the previous “high
fact on their invoices (e.g., by including
interest rate” calculated as the base
“the margin scheme for second-hand
rate plus 15%. Furthermore, the base
goods”). This is a simplification of the
rate for these purposes can only be as
previous Swedish rule.
low as 1.25%, previously the lowest rate
• The VAT and value amounts on invoices was 1%.
issued in a foreign currency must be
• The place of supply for the long-
converted to Swedish kronor (SEK) or
term hire of means of transport, to
euros. However, the exchange rate used
a non-taxable person is deemed to
for this conversion no longer needs to
be the place where there the non-
be shown on the invoice.
taxable person is established, where
• For intra-Community supplies of goods his permanent address is or where
carried out in accordance with the his usually residents is. Special rules
conditions specified in Article 138 or apply to the hiring of boats, for which
for supplies of services for which VAT the place of supply could be the place
is payable by the customer pursuant to where delivery takes place.
Article 196, an invoice must be issued

Tanzania
A VAT reform law is expected to come various administrative measures including
into force for fiscal year 2013–14. It is the establishment of tax service centers to
expected to broaden the tax base by support tax compliance, the introduction
minimizing exemptions and preferential of intensified risk-based and quality tax
treatments and to introduce simplified tax audits, and the usage of electronic fiscal
administrative procedures to help boost devices (EFDs) to track tax collections at
collections. To this end, the Tanzania the point-of-sale.
Revenue Authority (TRA) has proposed
Thailand
The 7% VAT rate will revert to 10% on
1 October 2014, unless the 7% rate is
extended in the meantime.
Trinidad and Tobago

The following changes apply: customs duties with effect from
2 October 2012. Previously, these
• Food items (other than “luxury” items
items were subject to VAT at the
and alcohol) are now zero-rated with
standard rate of 15%.
effect from 15 November 2012.
Previously, food was subject to VAT at • A tax exemption on specific machinery
the standard rate of 15%. and equipment used in the creative
arts industry was proposed in the
• Security cameras and video recording
2012–13 Budget, but no legal notice
or reproducing apparatus intended for
has been passed to effect.
use in CCTV (closed circuit television
systems) are exempt from VAT and
Tunisia
Effective 1 January 2013, local From the same date, VAT is suspended
authorities and state-owned entities are on training services for pilots who are not
required to withhold 50% of the VAT working for airlines.
due on their acquisitions of immovable
properties and businesses transferred
as going concerns if the value of the
transaction exceeds TND1,000.

Turkey
With the Council of Ministers Decision determined in accordance with article
no. 2012/4116 published in the Official 29 of the Real Estate Tax Law for the land
Gazette dated 1 January 2013, the way on which the house is built on the date
that VAT applies to house construction when the building license is obtained,
has been changed. VAT applies at varying including cases where the license is later
rates, based on the location or type of the revised and the construction quality is
house or on the unit square meter (m2) increased. The VAT rates are as follows:
value of the land on which it is situated.
• 8% on the delivery of houses whose
The new rates apply to house construction
land unit m2 tax value is between
projects that begin 1 January 2013
TL500 and TL1,000.
onwards.
• 18% on the delivery of houses whose
For houses with a net area up to 150 m2
land unit m2 tax value is greater than
built as luxury houses or first-class
TL1,000.
construction in metropolises,4 the VAT
rate, depends on the unit m2 tax value,
Turks and Caicos

On 19 July 2012, the Turks and Caicos 8.5% to 12.5%, plus a zero rate. The
Islands introduced wide-ranging VAT introduction of VAT is intended to reduce
legislation for the first time. The planned customs import duty and to replace bank
date of implementation is 1 April 2013. charges, carbon tax, communications tax,
The VAT is expected to apply to most hotel and restaurant accommodation tax,
imports and on consumed goods and insurance premiums tax and vehicle-hire
services, with a VAT rate ranging from stamp duty.
Ukraine
Effective 1 January 2013, VAT taxpayers • Encryption devices for data protection
may obtain VAT refunds by accepting purposes.
Treasury promissory notes from the
The exemption is expected to remain in
government. A Treasury promissory note
force until 2023.
may be used upon maturity to offset any
of the taxpayer’s tax liabilities. Also the Effective 1 January 2013, money transfer
recipient of a Treasury promissory note services are included in the list of VAT-
can sell it to another taxpayer. At the exempted activities.
time of writing, the procedure for issuing
Effective 4 November 2012, favourable
Treasury promissory notes is still to be
changes related to the VAT regime for
published.
product sharing agreements (PSAs) were
Effective 1 January 2013, a VAT introduced. Among other things, PSAs
exemption applies to supply of: are entitled to an automatic refund of VAT
credits.
• Software, including operational systems
and other computer programs (or their
parts) including programs represented
as Internet web sites or online services
4. Under the scope of the Metropolitan Municipality Law — except for areas determined as reserve construction areas and risky areas
under the Law no. 6306 on the Transformation of Areas Under Disaster Risk and areas where risky construction has been built.

United Kingdom
Effective 1 October 2012, various belongs. Affected businesses should
changes were made to the VAT treatment review whether these changes mean that
of supplies of catering, sports drinks, self they are required to register for VAT in
storage, hairdressers’ chair rental and other EU member states.
alterations to listed buildings. The effect
Effective 1 April 2013, a reduced (5%)
of these changes was to broaden the
rate of VAT will be introduced for the
VAT base.
transport of passengers by small cable-
Effective 1 November 2012, the UK VAT based transport systems, in place of the
administration introduced an enhanced standard rate (20%) that currently applies.
online service for UK VAT registration
Effective 6 April 2013, certain larger
(and deregistration) applications and for
holiday caravans, which are currently
notifying changes to registration details.
eligible for VAT zero-rating, will become
This provides an incentive for businesses
subject to a reduced (5%) rate of VAT.
to use online services by offering quicker
and more accurate processing. Effective 1 August 2013, the reduced
(5%) rate of VAT for the supply and
Effective 1 December 2012, the
installation of energy-saving materials
VAT registration threshold (currently
in buildings used for charitable purposes
£77,000) was removed for businesses
will be withdrawn, following which the
not established in the UK (i.e., a nil
standard rate of VAT (20%) will apply.
registration threshold now applies). This
means that any non-established business From the same date, the VAT exemption
that makes a taxable supply in the UK for supplies of research services between
(that is not covered by an existing VAT eligible bodies (mainly government
simplification) is required to register for departments, schools, universities,
UK VAT, regardless of the value of the charities and other public bodies) will be
supply. All non-established businesses withdrawn, following which the standard
that make taxable supplies in the UK rate of VAT will apply.
should review whether they are required
In September 2012, the UK VAT
to register for VAT.
administration announced a review of
Effective 1 January 2013, a number whether the existing VAT education
of minor amendments were made to exemption should be extended to
the existing UK VAT invoicing rules to commercial providers of higher education
reflect the changes introduced by the (such as universities) to align their VAT
EU Invoicing Directive, which seeks to treatment with that of not-for-profit
remove obstacles to electronic invoicing and publicly funded providers of higher
and further simplify and harmonize education. Any legislative changes
VAT invoicing rules across all EU resulting from this review are expected to
member states. be introduced in summer 2013.
From the same date, the rules governing In March 2010, the UK VAT
the VAT treatment of business-to- administration announced that it will
consumer (B2C) supplies of the long-term implement a new penalty regime for late
hire of means of transport have changed. filing of VAT returns and late payment of
Until 31 December 2012, such supplies VAT, to replace the UK’s existing default
were subject to VAT in the EU member surcharge regime. However, it is not yet
state where the supplier belonged. known when this new penalty regime will
However, effective 1 January 2013, such be implemented.
supplies are generally subject to VAT in
the EU member state where the customer

United States of America
The United States (US) does not impose and use tax collection purposes if the
a national-level sales tax or VAT. Rather, seller was a member of a controlled
sales taxes and complementary use taxes group that has at least one member
are imposed and administered at the state that is a retailer within the state. For
(sub-national) and local (sub-state) levels. sellers that were not members of such
As a result, there are more than 7,500 controlled groups, Colorado would have
potential taxing jurisdictions for sales and required the seller to provide the state’s
use tax purposes in the US. Adding to Department of Revenue with identifying
this complexity, often sales and use taxes information about each Colorado
are not applied uniformly among these customer, including their names,
various taxing jurisdictions. Nevertheless, addresses and the amount of their
a number of sales and use tax trends taxable purchases for the year, or face a
have developed and continued in recent per-customer penalty. In January 2011,
years as state and local governments shortly before it was to go into effect,
have increased their enforcement efforts a federal court issued an injunction,
with respect to sales and use taxes, which barring the law from taking effect.
generally account for 20% to 25% of all The statute ultimately was declared
state and local business tax revenue. unconstitutional and was struck down in
March 2012.
The most significant ongoing sales and
use tax trend since 2008 has involved • The states of New York (2009) and
efforts in a number of states to require Oklahoma (2010) adopted similar
“remote sellers” (e.g., vendors who sell presumptions with respect to controlled
taxable goods to customers in other group members, but neither state
states) to collect and remit tax on sales enacted a reporting requirement similar
to in-state customers. Under US law, to Colorado. In 2011 and 2012, an
a remote seller must collect and remit additional fifteen states adopted or
sales and use taxes only if it has physical considered enacting similar controlled
presence (known as nexus) within the group/affiliate presumption statutes.
taxing state. If the seller lacks nexus, the
• Since 2010, the state of Oklahoma also
customer is required to self-assess and
has required remote sellers to notify
pay the tax on his purchases. Examples of
customers on their websites, catalogs
this trend include:
and invoices that use tax is due, and
• In 2008 and 2009, the states of New that the customer is required to self-
York, North Carolina and Rhode Island assess and pay the tax. At least five
each adopted laws that require non- additional states adopted or considered
resident online retailers to collect tax on similar sales and use tax reporting
sales to in-state customers if the retailer statutes in 2011 and 2012.
contracted with a New York resident
• In 2011, South Carolina and Texas
to refer potential customers to the
enacted legislation specifying that
seller. In November 2010, the New York
operation of an in-state warehouse or
statute was upheld as constitutional
distribution center, either directly or
by a New York State appellate court.
through an affiliate, would create nexus
In 2011 and 2012, approximately 23
for a remote seller. Similar measures
additional states had either adopted or
were passed in Georgia and Virginia
considered similar legislation.
in 2013, with a further six states
• In 2010, the state of Colorado adopted proposing such measures.
a new law that would have created
a presumption that a remote seller
had nexus with the state for sales

United States of America (continued)
• A number of states also attempted to • Treatment of specified IT service
use nexus as a tool to attract business transactions, including data processing,
and jobs. In 2011, South Carolina and “cloud computing” and “information
Tennessee each enacted legislation services” should continue to face
that would exempt certain remote scrutiny from state lawmakers.
sellers from having to collect sales and
• Limitation of exemptions for related
use taxes on transactions with in-state
party and other “historically exempt”
residents to the extent that the remote
business transactions, such as
seller opened a new distribution center,
contributions, spin-offs and business-
and met minimum investment and job
line sales may be limited or unavailable
creation thresholds. South Carolina’s
in more states.
measure was directly related to the
legislation described immediately • Determining the appropriate sales price
above. In 2012, a number of other for “deal of the day” group discount
states enacted similar provisions while transactions.
at least one state (Georgia) passed
Sales and use tax credit and incentive
a law expressly prohibiting such
programs have faced additional scrutiny
agreements with remote sellers.
in a number of states looking to reduce
Through 2012, three separate federal spending and increase revenues. The
bills that would eliminate the physical recent trend for many such state
presence nexus standard for sales and programs has been to limit tax benefits
use tax were before Congress.5 Each bill to taxpayers that create higher numbers
required states to simplify their sales and of new jobs and/or invest significantly
use tax laws to a certain degree in order more capital within the state than under
to be able to compel remote sellers to previous programs. In addition, states
collect the tax. However, none of the bills offering such programs continue to apply
has been voted out of committee and more rigorous testing standards to ensure
the likelihood of any of them passing is that their tax investments yield actual
remote through the first half of 2013. results (e.g., new jobs, infrastructure)
In addition to increased collection As in 2012, few states are expected to
requirements, the states continued to offer full-scale sales and use tax amnesty
expand or consider expanding their sales programs in 2013. Under a typical state
and use tax base throughout 2012, tax amnesty program, taxpayers who owe
covering a broad range of transactions. past taxes are allowed to register and
Common themes in a number of states satisfy their outstanding liabilities with
include: reduced penalty and/or interest rates.
Rather than tax amnesties, most states
• Application of the tax to transactions
continue to increase enforcement through
involving non-tangible goods (e.g.,
more frequent and aggressive audits,
remote access and electronically
with a particular focus on exemption
delivered software, digital music
qualifications. Areas of particular
and books). While treatment is not
focus include: proper use of exemption
consistent across the states, the trend
certificates; timely registration in states
toward increased taxation of intangibles
where the seller has nexus; and proper
and services likely will continue into
sourcing of multistate use (e.g., multiple
2013 and beyond.
software seat licenses).
5. Congress has authority under the US Constitution to regulate interstate commerce, including taxation.

Uruguay
A range of tourism tax incentives have consumed abroad, only for payments
been introduced that apply from made by non-residents with a credit
15 November 2012 to 31 March 2013 or debit card issued abroad. Goods
to increase the competitiveness of the covered by this provision include
country within the region. The main clothes, leather goods, food, drinks and
measures planned are as follows: art crafts.
• A full reduction of VAT paid on listed • The grant of an income tax credit on
goods and services purchased by high-season real estate rentals, up to
non-resident individuals, including 10.5% of the gross rent amount (an
restaurant meals and car rentals. The increase from the current figure of 6%).
incentive only applies to payments Again, only payments made by non-
made with a credit or debit card issued residents with a credit or debit card
abroad. issued abroad are eligible for this credit.
• An 80% VAT refund for the acquisition
of goods bought to be used or
Vietnam
A pilot VAT refund scheme began in • Enterprises with losses for two
July 2012 and is expected to run until consecutive years or more or that have
30 June 2014. It applies to foreigners losses that exceed their chartered
and overseas Vietnamese visitors capital
passing through the country’s two largest
• Enterprises with a VAT refund arising
airports. Under the project, foreigners
from business activities of real estate
and overseas Vietnamese who buy goods
trading and services
in Vietnam and leave through Noi Bai
Airport or Tan Son Nhat Airport may be • Enterprises with a change in business
reimbursed 85% of the VAT paid. The location within the 12 months prior to
remaining 15% of the refund value is the date of the tax refund decision
used as a service fee to pay the banks
• Enterprises that have had an unusual
that handle tax repayments. To obtain a
change between taxable revenue and
refund, foreigners are required to have
refunded tax within the 12-month
a valid invoice with a value of at least
period
VND2 million (US$95) and a tax claim
form. For other enterprises, the tax authorities
must conduct a tax audit based on the
Effective 10 November 2012, a VAT
risk level of the refund (priority for
refund may be made on the basis of
audit is given to cases with a significant
“refund first, tax audit later.” Accordingly,
refund amount, etc.) within a period not
the tax authorities must perform a tax
exceeding 10 years from the date of the
audit within one year from the date that
tax refund decision.
the decision on the VAT refund is granted
in the following cases:

Zambia
Effective 1 January 2013, the following in multi-facility economic zones and
VAT changes apply: industrial parks are now liable to
standard rate VAT.
• The annual turnover threshold for
VAT registration increased from • Bread and wheat, adventure tourism for
ZMK200 million to ZMK800 million. local tourists and tour guide activities
are now zero rated.
• Polymer granules, liquid polymers and
synthetic woven bags and block bottom • The period within which tax invoices
woven bags that were previously VAT can be used to support a VAT claim has
exempt are now subject to VAT at the been reduced from 12 months to six
standard rate. months.
• Goods and services supplied to and
imported by businesses operating
Zimbabwe
Effective 1 January 2013, the following The procurement of servers required
changes apply: to receive data from electronic fiscal
devices is in progress.
• Soya meal and live birds are exempt
from VAT. • Penalties for failure to record
transactions on time using on electronic
• A penalty is imposed for a failure to
fiscal devices may be reviewed on
pay deferred VAT within the prescribed
appeal to the Commissioner of
90-day period from date of importation
Domestic Taxes.
or for selling, re-exporting or otherwise
disposing of such goods without having
used them in the manner that qualified
them for deferment of payment of tax.
• The tax authorities are to step up
enforcement of electronic fiscal
recording of taxable transactions.

2
Excise and other
indirect taxes
Excise and other taxes map 74
Excise and other indirect taxes 76

Norway
1 January 2013: motor vehicle re-registration
tax is reduced by 40% for commercial vehicles
Excise and other taxes

and by 12% for other motor vehicles.
1 January 2013: CO2 tax on petroleum
activities has also been increased by
NOK200 per ton.
Romania Netherlands
The temporary reduction in the property
1 January 2013: excise duty rate for diesel oil is increased to
transfer tax from 6% to 2% which was to last
€391 per ton (from €374 per ton).
until 31 June 2012 has been continued on a
1 February 2013: 60% tax will be charged on the permanent basis.
supplementary revenues (earned until 31 December 2014)
1 January 2013: insurance premium tax (IPT)
derived by certain natural gas producers.
rate in the Netherlands has increased from
To 31 December 2014: special tax of 0.5% of revenues will be 9.7% to 21%.
payable by companies exploiting natural resources (with the
exception of natural gas).
Nicaragua
1 January 2013: new excise tax applies on
fuels sold or imported into Nicaragua, including
the import and nationalization of goods derived
from petroleum.
Mexico Jamaica
1 January 2013: beer with a 14% alcohol 15 July 2012: tax applies on
content is subject to a 26.5% excise tax telephone calls originating or
rate (instead of the 26% tax rate previously terminating in Jamaica.
approved for 2013).
August 2012: tourist tax of US $20
1 January 2013: alcoholic beverages and beer is payable by each foreign-arriving
with a 20% alcohol content or more are subject passenger.
to a 53% excise tax rate (instead of the 52%
1 September 2012: a per-night
excise tax rate previously approved).
accommodation tax is levied on each
occupied hotel room.
United Kingdom Costa Rica

1 February 2013: amusement machine license 29 November 2012: excise tax applied to national
duty (AMLD) will be replaced by a new machine or foreign soft drinks is 5.725 colones per consumer
games duty (MGD). Two MGD rates apply: 20% unit of 250ml.
and 5%.
Brazil
1 April 2013: standard rate of landfill tax (LFT)
will increase by £8 per ton to £72 per ton. 9 January 2013: tax incentives relating to the 2016
Olympic and Paralympic Games in Rio de Janeiro
1 April 2013: rate of aggregates levy will entered into force.
increase from £2 to £2.10 per ton.
1 January 2014: tobacco-free (herbal) Switzerland
smoking products will become liable to 1 April 2013, excise duty on cigarettes will increase from
tobacco duty at the same rate as their tobacco CHF395 to CHF400 per 1,000 cigarettes, which results in
counterparts. an increase for CHF0.10 to CHF8 per pack of 20.
Turkey
Uzbekistan 22 September 2012: special consumption tax on
alcoholic beverages and on vehicles with an engine
1 January 2013: excise duty increased on wine capacity less than 1600 cm3 has been increased.
by 5%, on ethyl alcohol by 15% and on other
types of alcoholic beverages by 20%. 22 September 2012: land registry title fees were
increased to 0.02% from 0.0165%.
1 January 2013: excise duty rate for tobacco
products increased by 25%. Zimbabwe Saint Lucia
Zambia 1 December 2012: excise duty increases apply to:
1 May 2012—30 April 2016:
locally produced clear beer (40% to 45%), cigarettes
13 October 2012: import duty suspended on import duties will not be levied
(from ZWL10 per 1,000 to ZWL15 per 1,000).
tourism-related equipment as an incentive to on medicines (previously 10%
develop the tourism industry. Until June 2013: suspension of customs duty on rate applied).
vehicles used in tourism.

Belgium Denmark Guernsey
1 January 2013: excise duties on tobacco and 1 January 2013: stamp duty on policies issued 1 January 2013: duty increases on tobacco
wine have been increased. by insurance companies has been changed to products (6% increase), alcohol (3% increase)
an insurance premium tax of 1.1%. and motor fuel (1.5p per liter).
Bosnia and Herzegovina
1 January 2013: excise duty on cigarettes
1 January 2013: new excise duty applies to
work-related injuries.
Hungary
increased. 1 January 2013: excise duty on alcoholic
Finland products is raised by 10% and the tax on
Bulgaria cigarettes and smoking tobacco is increased by
1 January 2013: insurance premium tax rate
5% to 10%.
1 January 2013: excise rates on certain increased from 23% to 24%.
categories of goods increased in line with the 1 January 2013 and 1 May 2013: excise duty
EU accession engagements of Bulgaria. Gambia on liquefied petroleum gas fuel is increased in
two stages.
New tobacco taxation policy to be introduced
Czech Republic in 2013, which will result in a 25% increase in
duty.
Moldova
1 January 2013 and 1 January 2014:
two-stage increases in excise duty rates 1 January 2013: duties for most excisable
on tobacco products. goods have been increased.
1 January 2013: customs duties for some
goods imported in Moldova have also increased.
Slovenia
1 March 2013:
financial services tax
(6.5%) will apply to
a range of financial
transactions.
Italy Philippines
1 January 2013: 1 January 2013: a
excise duty rates on uniform ad valorem
fuel and diesel are tax rate is imposed on
€0.7284 per liter and distilled spirits.
€0.6174 per liter,
1 January 2013,
respectively.
specific taxes on
1 March 2013: new wines per liter of
Isle of Man tax will apply to volume capacity
Nigeria 1 February 2013: machine games financial transactions. apply.
duty (MGD) payable at a single 1 January 2013,
1 January 2013:
rate of 15% on the net takings of specific taxes for
levy of 50%
qualifying machines. cigarettes packed by
and 60% apply
machine apply.
to imported
raw sugar and
Mauritius
refined sugar, 1 January 2013: 15%
respectively, concessionary excise duty
and a levy of rate is restricted to the first
100% applies to MUR1.5 million import value
imported brown on a motor vehicle of a
and polished rice. returning resident.
Ireland
6 December 2012: excise duty on a standard 75cl bottle of wine
increased by €1 (including VAT) per bottle, and the rate of excise duty on Spain Sri Lanka New Zealand
a pint of beer or cider and on a standard measure of spirits increased by
1 January 2013: 1 January 2013: 1 January 2013:
€0.10 (including VAT).
tax on retail sales of telecommunication excise and excise-
6 December 2012: excise duty on tobacco products increased by €0.10 some fuels (IVMDH or levy applicable equivalent duty
(including VAT) per packet of 20 cigarettes and on a pro-rata basis for Céntimo Sanitario), to internet tariffs rates on tobacco and
other tobacco products. introduced in 2002, reduced from 20% tobacco products
has been abolished. to 10%. have undergone the
1 May 2013: carbon tax will be extended to apply to solid fuels at an annual indexation
initial rate of €10 per ton. The rate will increase to €20 per ton effective as well as a separate
1 May 2014. 10% increase.

Aruba
Effective 1 January 2013, excise duties
on cigarettes have increased by AWG1.91
per pack of 20 cigarettes.
Belgium
Effective 1 January 2013, the excise
duties on tobacco and on wine have been
increased.
Benin
The following changes apply effective • The excise duty rates have increased
1 January 2013: to 7% on soft drinks, 20% on beer and
cider, 40% on wine and 45% on liqueurs
• For the year 2013, a 1% tax applies to
and champagne.
the re-exported petroleum products.
• The excise duty on perfume and
• The passenger tax has increased from
cosmetic products has increased to 7%.
FCFA10,000 to FCFA20,000 per
passenger. • The excise duty on tourism vehicles
with an engine capacity of 13
• The night tax paid by hotels has been
horsepower or greater has increased
fixed at FCFA1,000 per bed per night.
to 10%.
• The communication fee applied to
• A new tax applies on the import and
international calls received in Benin has
sale of plastic bags. It applies at a
increased from FCFA15 to FCFA23 per
rate of 5% based on the value of bags
minute.
at importation or at the time of local
• A new 10% tax applies to energy drinks. production.
BES islands (Bonaire,

Sint Eustatius and Saba)
Effective 1 January 2013, the excise duty
on gasoline is reduced by US$0.10 per
hectoliter.

Bosnia and Herzegovina
Effective 1 January 2013, excise duty on minimum excise duty has been increased
cigarettes has increased to BAM37.50 to BAM91 per 1,000 cigarettes (from
per 1,000 cigarettes (from BAM30 per BAM82.50).
1,000 cigarettes), while the overall
Brazil
The law containing the tax incentives hiring individuals (with or without an
relating to the 2016 Olympic and employment relationship) for the purpose
Paralympic Games in Rio de Janeiro was of the events. Even though the tax
published in the Official Gazette dated incentives have been published and are
9 January 2013 and entered into force already in force, additional administrative
on that date. Tax benefits are available procedures must be defined by the
for the entities listed in the legislation tax authorities and published through
that are involved with these sporting legislation.
events, on the condition that they are
incorporated in Brazil and that they
engage in selling goods and services or
Bulgaria
Effective 1 January 2013, excise rates on in line with Bulgaria’s EU accession
certain categories of goods are increased agreement.
Canada
Effective 1 July 2012, all cigarettes, The new federal excise stamp indicates
tobacco sticks and fine-cut tobacco that federal excise duty has been paid
products for sale in Canada must on the tobacco product and that it has
carry the new federal excise stamp in been manufactured legally. The stamp
accordance with the Excise Act, 2001. has state-of-the-art visible and hidden
Contravention may result in a fine, identifiers and security features similar
imprisonment or both. to those used in Canadian banknotes, as
well as hidden security features that only
federal and provincial law enforcement
agencies can detect.

Cape Verde
The recently approved eco levy is now • Packaging for food products of prime
charged on pollutant products (mainly necessity
packaging), such as non-biodegradable
• Imported packaging for goods intended
packaging made with metal, glass, plastic
to be exported or re-exported
and other environmentally harmful
products and packaging. The levy is Additionally, obligations must be fulfilled
calculated based on the kilograms of by taxpayers in relation to certain
pollutant products listed in a “black list.” products, such as the obligation to return
The levy ranges from ECV2 to ECV200 to the origin, to recycle or to reuse at
per kilogram. An exemption applies to the least 50% of the products and packaging
following: used (e.g., glass bottles, metal cans, used
tires)
• Packaging for medicines
Costa Rica
Effective 29 November 2012, the excise • An excise tax collected for the benefit
tax applied to national or foreign soft of IFAM (Institute for Municipal
drinks is 5.725 colones per consumer Development) applies at a rate of
unit of 250ml. For small factories whose 0.22332 colones per ml of alcohol in
annual production does not exceed national or foreign beer.
16 million consumer units, the tax per
• An excise tax collected for the benefit
consumer unit of 250ml is 2.35 colones.
of INDER applies at a rate of 0.2
A consumer unit is defined as follows: colones per ml of alcohol in national or
foreign wine.
• The consumer unit for all liquid drinks
subject to tax is 250ml. • An excise tax of 0.1 colones per ml of
alcohol applies to national or foreign
• The consumer unit for soda syrups
wine prepared with fermented fruits
(post mixes) is the equivalent ml of
(other than grapes) if sales do not
syrup used to make 250ml of the
exceed 15 million ml. If sales exceed
finished beverage.
this amount, the tax is 0.2 colones per
• For packages containing different items, ml of alcohol.
the tax is applied proportionally.
The taxable event for these excise
In addition, from the same date, the taxes occurs at the factory level when
excise tax levied on national or foreign the invoice is issued or the product is
beer and wine has also been modified as delivered (whichever occurs first) and at
follows: importation when the customs return is
accepted. These tariffs will be updated
• An excise tax collected for the benefit
quarterly by INDER and the increase may
of the Institute of Rural Development,
not exceed 3%.
formerly known as IDA (INDER), applies
at a rate of 0.4 colones per ml of
alcohol in national or foreign beer.

Croatia
The Excise Tax Act and the Special Tax on In addition, the special tax on the
Motor Vehicles law have been approved transfer of vessels and aircrafts has been
by the Parliament in advance of Croatia’s abolished.
accession to the EU, which is currently
The excise tax on cigarettes and fine-cut
scheduled for 1 July 2013.
tobacco will increase so as to adjust the
The main change under the new Special Croatian excise system to the EU rules.
Tax on Motor Vehicles is the combined
Also, the authorities intend to cancel
taxation system, according to which, the
the Special Tax on Luxury Products
special tax is determined based on the
Act, due to low tax revenues and high
sale (market) value and CO2 emissions of
administrative costs.
the vehicle.
Czech Republic
As part of the gradual implementation place in two stages; the first stage took
of European directives, there will be an effect on 1 January 2013 and the second
overall increase in excise duty rates on stage will take effect on 1 January 2014.
tobacco products. This increase will take
Denmark
The Danish Parliament has adopted a Until now, Denmark has charged tax
bill regarding excise duty on printed on insurance as a stamp duty on the
advertising material distributed to policies issued by insurance companies.
households in connection with a The amount could be paid up-front when
company’s commercial activity and entering into an insurance agreement
without payment. The excise duty is or as a current stamp duty. Effective
collected by the distributor at a rate of 1 January 2013, this duty has been
either DKK2 or DKK3 per kilo of printed changed to an insurance premium
advertising material (increasing to DKK4 tax of 1.1%.
per kilo from 2014). The application of
The existing premium tax on insurance for
the new excise duty currently awaits
pleasure crafts has been increased from
approval from the EU Commission.
1% to 1.34%.
Effective 1 January 2013, an indexation
Effective 1 January 2013, a new excise
rate of 1.8% applies to the green car
duty applies to work-related injuries. The
owner tax, the excise duty on water,
duty is calculated on the basis of a very
various consumption taxes (coffee, tea,
complex formula based on the amount
cigarette paper and smokeless tobacco,
of damages paid for work-related injuries
incandescent lamps) and health-
and occupational diseases the previous
promoting excise duties (on items such as
year. It is charged by a public institution to
beer, wine, saturated fat, chocolate, ice
employers.
and mineral water). Indexation rises are
also planned for 2015 and in 2018.

Ecuador
All transfers of cash overseas made by • Exports of goods and services — CET
an Ecuadorian entity are subject to a applies if the cash does not enter
5% currency exportation tax (CET). The Ecuador within 180 days after the
tax law also assumes that the following goods arrive at their destination or the
transactions trigger the 5% CET: service has started.
• Payments made from foreign bank For imports that remain payable for a
accounts of Ecuadorian entities, period longer than 12 months after the
provided that this cash was not nationalization date, the CET must be paid
levied with CET when it was initially on the day after the deadline stated.
transferred to the foreign bank
accounts as follows: If accounts receivable have been offset
by accounts payable the currency
Description Tax base exportation tax applies to the gross
Imports Goods customs value amount.
Principal amortization Gross amount of
and interest payments the currency being
on foreign loans transferred abroad
Other services, Gross amount of
intangible assets, the currency being
among others transferred abroad
Fiji
A green tax has been introduced as • The fiscal duty on cigarettes, tobacco
follows (in Fiji dollars): and alcohol will increase by 10%.
• The fiscal duty on motor spirits is • The fiscal duty applied to cool room
increased from 44 cents to 46 cents freezer panels, boxes, cases, etc., made
per liter. of Styrofoam is increased to 32%.
• The fiscal duty on industrial diesel oil • The duty rate is also increased to 32%
is increased from 18 cents to 20 cents for imported milk and milk products.
per liter.
The following changes apply to import
• The green tax will not apply to white excise duty:
benzene, kerosene and premix.
• The duty on vegetables is to be reduced
• A duty rebate will apply of 2 cents per from 10% to 0% to bring the rate into
liter for inter-island vessels, bus and line with the 0% duty applied to fruits.
fishing industries.
• A duty of 15% will be imposed on
The following changes also apply to articles made of plastic.
fiscal duty:
• The fiscal duty on smartphones is to be

reduced from 5% to 0%.

Finland
Effective 1 January 2013, the insurance
premium tax rate increased from 23% to
24% (in line with the VAT rate).
Gambia
The Government has announced it will of cigarettes (due to increase to 7 dalasi
introduce a new tobacco taxation policy in per pack in 2015) and an excise tax of
2013, which will result in a 25% increase 37.50 dalasi per kilogram applies to other
in duty. Effective January 2013, an tobacco products not in packs.
excise tax of 5 dalasi applies per pack
Guernsey (Channel Islands)

Effective 1 January 2013, the following • A 3% increase on alcohol
duty increases apply:
• An increase of £0.015 per liter of
• A 6% increase on tobacco products motor fuel
Hungary
A transaction tax applies to payment providers that are subject to the financial
service providers that have a registered transaction tax must report and pay
seat or branch in Hungary, credit their tax liabilities on a monthly basis by
institutions entitled to provide currency the 20th day of the month following the
exchange services, and “special service month when the transfer took place.
intermediaries” of currency exchange
Minor amendments have been made
services. The Hungarian National Bank is
to the insurance tax act, primarily to
not subject to this tax. Payment services
address settlement and procedural
cover, among other things, postal orders,
matters concerning the fire protection
the issuance of bank cards and checks,
contribution (which is to be phased out).
services relating to cash payments made
At the same time, the definition of a
to and from payment accounts and
taxable premium has been extended
all other activities relating to account
to cover amounts that have not been
management. The financial transaction
booked as gross premiums under the
tax must be paid by the service provider.
accounting rules but nonetheless qualify
As a general rule, the financial transaction
as consideration for an insurance service.
tax rate is 0.2% of the tax base, capped
at HUF6,000 (approximately €20) per Effective 1 January 2013, the excise duty
payment transaction. Cash payments on alcoholic products is raised by 10% and
are, however, taxed at a higher rate of the tax on cigarettes and smoking tobacco
0.3% (also capped at HUF6,000 per is increased by 5% to 10%.
transaction) irrespective of whether the
The excise duty on liquefied petroleum
payment is made from a payment account
gas fuel is increased in two increments
or using a bank/credit card. Service
from 1 January 2013 and 1 May 2013.

Hungary (continued)
The excise security to be paid by Effective 1 January 2013, it is possible
distilleries operating exclusively on a to take over green tax liabilities in cases
contract basis is decreased, and the where distributors sell on packaging
security to be paid by commercial equipment in an unchanged form and
distilleries producing a maximum of condition, or only refitted. Also, it will be
20 hectoliters of alcohol has also been possible to assume the liability repeatedly
lowered. in the supply chain. Tasks relating to
taxation of the green tax will once
Producers of pure vegetable oils
again fall to the tax organization of the
are entitled to use those oils in their
national tax and customs authority, while
businesses. Also, tax refunds for
supervisory tasks regarding the waste
commercial gas oils may be claimed
generated from products subject to green
monthly, rather than quarterly or yearly,
tax will fall within the competence of the
and the relevant invoices or documents do
customs organization of the national tax
not have to be attached to paper-based
and customs authority. green tax returns
claims. Effective 1 January 2014, refund
should be filed and the tax paid to the
requests for gas oils in the agriculture
customs authority by 14 February 2013
sector must be filed electronically.
and thereafter to the tax authority.
Effective 1 January 2013, damaged
A cultural tax applies to cable television
tax stamps may be replaced if certain
providers and satellite and landline
procedural rules are met.
broadcasters that offer access to at least
Also as of 2013, up to 10,000 liters of one adult channel to their subscribers.
bottled fermented sparkling wine may be
A new tax applies to public utility lines,
produced from wine grapes that farmers
which will be collected annually. It will
grow themselves for trading purposes in
be an asset-based tax that forms part of
simplified excise duty warehouse.
the income of the central budget. The
Energy drinks that do not contain taurine tax treatment of the public utility lines
but that have a relatively high methyl will be based on the status of the taxable
xanthine content, are subject to the snack asset as matters stand on the first day
tax (HUF40 per liters). Goods subject to of the year. Similarly, the person liable
the snack tax acquired from abroad are to pay the tax will be the person who
exempt if the taxpayer uses them in the meets the conditions of taxability on the
production of its own goods in such a way first day of the year. Public utility lines,
that the prepackaged nature of the goods telecommunication lines, public areas,
does not change. proprietors and operators are among
items defined in the new act. Tax liability
Effective 1 January 2013, the tasks
based on the ownership of a public utility
relating to taxation will fall within the
line will arise on the first day of the year
competence of the tax authority. However,
following the actual date when the utility
snack tax will still be reportable and
line in question was commissioned.
payable to the customs authority until
14 February 2013.

Ireland
Effective 6 December 2012, the excise Vehicle Registration Tax (VRT) is a one-
duty on a standard 75cl bottle of wine off payment that applies at the time of
increased by €1 (including VAT) per registration of the vehicle in Ireland.
bottle, and the rate of excise duty on a Changes have been made to the CO2
pint of beer or cider and on a standard bands used for assessing the tax payable;
measure of spirits increased by €0.10 as a result, the number of VRT rate bands
(including VAT). has increased from seven bands (ranging
from 14% to 36%) to 11. This change is
Effective 6 December 2012, the excise
likely to mean an increased amount of
duty on tobacco products increased by
VRT applies to the registration of nearly
€0.10 (including VAT) per packet of
all types of cars.
20 cigarettes and on a pro-rata basis for
other tobacco products. Effective 1 May 2013, carbon tax will
be extended to apply to solid fuels (e.g.,
Effective 1 January 2013, the rates of
peat and coal) at an initial rate of €10 per
motor tax increased for all cars, with
ton. The rate will increase to €20 per ton
average increases of approximately 6%
effective 1 May 2014.
for cars registered prior to 1 July 2008
(taxed according to their engine size)
and 12% for cars registered on or after
1 July 2008 (taxed according to their
level of CO2 emissions). At the same
time, however, the rate of motor tax on
electrical cars has decreased slightly.
Isle of Man
Effective 1 February 2013, machine VAT. The current regime, according to
games duty (MGD) will be payable at a which an interim duty on machines used
single rate of 15% on the net takings of for gambling purposes is levied and the
qualifying machines, i.e., machines where takings of these gambling machines are
an individual plays for a cash prize greater subject to the standard VAT rate of 20%,
than the smallest stake the machine will continue to apply to not qualifying
accepts. The takings will be exempt from machines.

Italy
Effective 19 December 2012 (under The average consumption of diesel
Article. 16, paragraph 3 of the Law eligible for tax benefits is reduced by 10%
Decree No. 504/1995) credits relating for 2013 and by 5% for 2014.
to taxpayers subject to excise duties may
Effective 1 March 2013, a new so-
benefit from a privilege claim to debtors’
called “Tobin” tax will apply to financial
movable properties up to the limit of the
transactions. The new tax will apply to
excise duty amount (the same level of
transfer of ownership of shares and other
privilege granted for tax credits to the
equity instruments issued by companies
tax authorities). The new formulation of
resident in Italy, as well as of documents
this article established by Law Decree
of title to these instruments (independent
no. 179/2012 extends the privilege to
of the issuer’s state of residence) charged
the excise warehouse keepers for energy
at a rate of 0.2% based on the value of
products.
the transaction. The tax rate will be 0.1%
Article 34, paragraph 43 of Law Decree if the transfer takes place on a regulated
No. 179/2012 requires that a “packing market. Exclusively for 2013, the tax
slip document” is issued when goods rates are equal to 0.22% for transfers that
are commercially transferred for the occur on non-regulated markets and to
first time. 0.12% for transfers on regulated markets.
Effective 1 January 2013, excise duty Effective 1 July 2013, the tax will apply
rates on fuel and diesel are €0.7284 per to some financial derivatives (for example,
liter and €0.6174 per liter, respectively. those executed based on the above equity
instruments). The tax rate will depend on
Effective 1 January 2013, in accordance
the type of instrument used and on the
with the EU Directive 2012/209/
value of the underlying contract.
EU, controls on the intra-Community
movements are extended to products An additional 0.02% tax will apply in
with the following codes: NC 3811 11 the case of high-frequency financial
10, 3811 11 90, 3811 19 00 and 3811 trades in shares, equity instruments and
90 00. derivatives operations. This additional tax
will apply from 1 March 2013 to transfers
To apply the reduced rates for energy
of shares and equity instruments, and
products used for agricultural purposes,
from 1 July 2013 to derivative operations
regions are required to use data obtained
connected with these instruments.
from the National Agricultural Information
System.

Jamaica
Effective 15 July 2012, a tax applies on required to pay a tourist tax of US$20.
telephone calls originating or terminating Effective 1 September 2012, a per-night
in Jamaica; the tax amount ranges from accommodation tax is levied on each
JMD0.05 to JMD0.075 per call. occupied hotel room. The amount of the
tax ranges from US$1 to US$4 per night,
Two taxes have been introduced that have
depending on the size of the hotel.
an impact on tourism. Effective 1 August
2012, each foreign-arriving passenger is
Malta
Excise duty rates have been increased €5 per ton and on cigarettes and tobacco
on fuel by €0.02 per liter, on cement by by 6% and 8%, respectively.
Mauritius
Effective 1 January 2013, the 15% import value on a motor vehicle of a
concessionary excise duty rate is returning resident.
restricted to the first MUR1.5 million
Mexico
Effective 1 January 2013, beer with a beverages and beer with a 20% alcohol
14% alcohol content is subject to a 26.5% content or more are subject to a 53%
excise tax rate (instead of the 26% tax rate excise tax rate (instead of the 52% excise
previously approved for 2013). Alcoholic tax rate previously approved).

Moldova
Effective 1 January 2013, the duties for duties for some goods imported in
most excisable goods (such as gasoline, Moldova (e.g., soaps, gums and caps)
diesel oil, beer, cigarettes and ethyl have also increased.
alcohol) have been increased. Customs
New Zealand
Effective 1 January 2013, excise and the annual indexation increase (based on
excise-equivalent duty rates on tobacco movement in the Consumers Price Index),
and tobacco products have undergone as well as a separate 10% increase.
Nigeria
Effective 1 January 2013, a levies of 50% and polished rice. This measure will take
and 60% apply to imported raw sugar effect, subject to the administrative
and refined sugar, respectively; and a and legislative processes required being
levy of 100% applies to imported brown enacted.
Norway
Effective 1 January 2013, the motor Effective 1 January 2013, the excise
vehicle re-registration tax is reduced by liability for mineral oil and gasoline is now
40% for commercial vehicles and by 12% tied to the boiling point of the oil.
for other motor vehicles. At the same
The Customs Credit account system has
time, the environmental components of
been changed. Instead of the current
the motor vehicle registration tax have
system whereby a credit fee is charged
been strengthened by placing more
for each entry declaration in a Customs
emphasis on the CO2 and NOX emissions
Credit account, customers will be charged
of the vehicle and less emphasis on its
a fee of NOK100 per month for each
engine size. The CO2 tax on petroleum
month when the Customs Credit account
activities has also been increased by
has been used, regardless of the number
NOK200 per ton.
of declarations. The use of electronic
The excise duty on non-alcoholic bank statements in “Altinn” will become
beverages has been increased to the same obligatory in 2013.
level as the excise duty on light beer.
Netherlands
The temporary reduction in the property The green tax on polluting energy has
transfer tax from 6% to 2% that was to last increased.
until 31 June 2012 has been continued
Effective 1 January 2013, the Insurance
on a permanent basis.
Premium Tax (IPT) rate in the Netherlands
The bank levy is doubled from 0.022% to has increased from 9.7% to 21%. The new
0.044% for short-term liabilities and from rate applies to insurance premiums that
0.011% to 0.022% for long-term liabilities. mature after 31 December 2012.

Nicaragua
Effective 1 January 2013, a new excise nationalization of goods derived from
tax applies on fuels sold or imported petroleum.
into Nicaragua, including the import and
Tax rates are included in the following table:
US$/gallon
Product Customs tariff
Pacific/Center Atlantic
Turbo 2710.11.20.10 US$0.0023 US$0.0023
Avgas 2710.11.20.20 US$0.2384 US$0.2384
Premium gasoline 2710.11.30.10 US$0.6985 US$0.1845
Regular gasoline 2710.11.30.20 US$0.1837 US$0.1131
Varsol 2710.11.40.10 US$0.0456 US$0.0456
Kerosene 2710.19.11.00 US$0.1115 US$0.0579
Diesel 2710.19.21.00 US$0.1430 US$0.1081
Fuel oil 2716.00.00.00 Exempt Exempt
Energy
Fuel oil 2710.19.23.00 US$0.0498 US$0.0498
Others
Asphalt 2715.00.00.00 US$0.0498 US$0.1230
The taxable base for calculating custom duties and taxes on imports may be summarized
as follows:
Taxable base for importation of goods
Customs CIF
=
duties value
Selective
consumption
CIF Customs Storage Other
tax (ISC) or = + + TSIM + +
value duties expenses expense
tax on fuels
(IECC)
Value added CIF Customs ISC or Storage

= + + TSIM + + + Other expenses
tax (VAT) value duties IECC expense
Customs
services fee = US$0.50 rate per each ton or fraction imported
(TSIM)

Philippines
Effective 1 January 2013, a uniform ad Effective 1 January 2013, the specific tax
valorem tax rate is imposed on distilled rates on fermented liquor are as follows:
spirits at a rate of 15% (for 2013–14)
• NRP per liter of volume capacity of
and 20% (from 2015 onwards) based on
PHP50.60 or less, at a rate of PHP15
the net retail price (NRP) per percentage
(for 2013), PHP17 (for 2014), PHP19
proof and a specific tax rate of PHP20 per
(for 2015), PHP21 (for 2016) and
proof liter. These ad valorem and specific
tax rates will be increased at a rate of 4% PHP23.50 (for 2017).
starting January 2016. • NRP per liter of volume capacity of
Effective 1 January 2013, specific taxes more than PHP50.60, at a rate of
on wines per liter of volume capacity PHP20 (for 2013), PHP21 (for 2014),
apply as follows: PHP22 (for 2015), PHP23 (for 2016)
and PHP23.50 (for 2017).
• Sparkling wines per 750ml with a NRP
of PHP500 or less, at a rate of PHP250, • These rates will be increased at a rate of
and with a NRP of more than PHP500, 4% effective January 2018.
at a rate of PHP700. Effective 1 January 2013, specific taxes
• Still wines and carbonated wines for cigarettes packed by machine are as
containing 14% of alcohol by volume or follows:
less, at a rate of PHP30, and containing • NPR per pack of PHP11.50 or less at a
more than 14% but not exceeding rate of PHP12 (for 2013), PHP17 (for
25% of alcohol by volume, at a rate of 2014), PHP21 (for 2015), PHP25 (for
PHP60. 2016) and PHP30 (for 2017)
• Fortified wines containing more than • NPR per pack of more than PHP11.50
25% of alcohol by volume will be taxed at PHP25 (for 2013), PHP27 (for
as distilled spirits. 2014), PHP28 (for 2015), PHP29 (for
• These rates will be increased at the rate 2016) and PHP30 (for 2017).
of 4% effective January 2014. • These rates will be increased at a rate of
4% effective January 2018.
Romania
Effective 1 January 2013, the following • Products (in principle, additives)
provisions apply: falling under codes NC 38111110,
38111190, 38119000 are subject
• The restriction concerning the
to the provisions on the control and
exclusive storage of excise goods in tax
movement of excise goods.
warehouses, which applied to certain
manufacturers of energy products or • The excise duty rate for diesel oil is
cigarettes and related parties, has been €391 per ton (up to 31 December 2012
eliminated. the rate was of €374 per ton).
• The possibility for the exclusive
storage of alcoholic beverages under
a duty suspension procedure has been
reintroduced.

Romania (continued)
Effective 1 February 2013, a number of • A 60% tax will be charged on the
new taxes related to energy: supplementary revenues derived by
natural gas producers (including their
• A tax applies to the activities of
subsidiaries and/or economic operators
companies that transport electricity
in the same economic interest group)
and natural gas and certain distributors
that also supply natural gas extracted
of electricity and natural gas (natural
from Romania to final consumers, from
monopolies) that hold licenses
the deregulation of natural gas prices
issued by ANRE. The tax is charged
for supplies made to final consumers.
for each megawatt hour (MWh) of
The taxable base is computed by
electricity or natural gas transportation
deducting from the supplementary
or distribution services invoiced
revenues:
The tax ranges from RON0.1 to
RON0.85 per MWh. • The related royalties
• Companies (including their subsidiaries • Upstream investments, capped at
and/or economic operators in the same 30% of the supplementary revenues
economic interest group) exploiting
These taxes are payable on a monthly
natural resources other than natural
basis by the 25 day of the following
gas (such as timber, coal, crude and
month and they apply until
ore) are liable to pay a tax of 0.5% of
31 December 2014.
their revenues (computed based on
specific regulations).
Rwanda
Gaming operators are now required to casino activities. In addition, winnings
pay a gaming tax at a rate of 13% on all at any gaming center are subject to a
gaming activities, including betting and withholding tax of 15%.
Saint Lucia
Effective 1 October 2012, the new for a four-year period from 1 May 2012
VAT regime entered into force. In (retroactively) to 30 April 2016.
order to cushion the VAT’s impact, the Previously, import duty was levied on
Government announced that import medicines at a rate of 10%.
duties will not be levied on medicines

Slovenia
Effective 1 March 2013, a 6.5% financial • Legal tender such as currency, bank
services tax will apply to a range of notes and coins
financial transactions, including:
• Services of insurance agents and
• Monetary credits or loans intermediaries
• Credit warranties and other monetary Financial services subject to VAT or
warranties insurance premium tax and services
performed by or for central banks,
• Deposits, bank accounts, payments,
diplomatic or EU institutions are exempt
debts, checks and other payment
from the financial services tax.
instruments
South Africa
The final design of the carbon tax is the Government’s carbon tax policy paper.
expected to be announced in 2013, Legislation on the new tax is expected to
following a consultation period based on follow during the latter half of 2013.
Spain
Effective 1 January 2013, the tax on (€12.00 per ton) used for the production
retail sales of some fuels (IVMDH or of electricity in electricity power stations
Céntimo Sanitario), introduced in 2002 or for the production of electricity or the
has been abolished. The tax was levied cogeneration of electricity and of heat in
on motor fuels sold at petrol stations and combined power stations.
the tax income was devoted to financing
No transfer tax will apply to certain
the health care systems administered by
transfers of shares in entities that mainly
regional governments.
own real state used for business purposes.
A number of changes relate to the energy Transfer tax applies to VAT-exempt
sector (e.g., a 7% tax on electricity supplies of real state.
production). Natural gas for purposes
Effective 1 July 2013, transport within
other than fuel and natural gas intended
Spain of goods subject to excise duties
for use as fuel in certain engines is
(i.e., under a suspension regime or where
taxed at €0.65 per gigajoule. A reduced
reduced or flat rates have been applied)
rate (€0.15 per gigajoule) applies to
must be accompanied by electronic
natural gas intended for professional
documentation.
use, provided it is not used to produce
electricity. New tax rates apply to gas
oil (€29.15 per 1,000 liters) and fuel oil
Sri Lanka
Effective 1 January 2013, the Solar power systems and other renewable
telecommunication levy applicable to energy equipment are exempt from
internet tariffs reduced from 20% to 10%. import duties. Go-carts and other
specially designed vehicles are also
exempted from excise duty.

Sweden
Effective 1 January 2013, the following • Fuel additives under CN 3811 are
changes apply: included in EMCS.
• Excise duties on tobacco have • Simplified rules apply to the suspension
increased. of excise duty on imported excise
goods.
• Certain movements of alcohol in the
Swedish territory are considered to be It has been proposed that the exemption
under excise duty suspension without from carbon and energy tax on biofuels
an e-AD form, provided that the goods (such as ethanol, ETBE, RME, FAME and
are sent from small wine producers. HVO) blended in gasoline or diesel be
replaced by deductibility. The deductibility
• All energy products intended to be
level will vary for different biofuels and
consumed or sold as a fuel additive or would be allowed only for certain levels
to increase the fuel volume are subject of blending. The effective date for this
to carbon and energy tax. measure has not yet been decided.
Switzerland
Effective 1 April 2013, excise duty on results in an increase of CHF0.10 to
cigarettes will increase from CHF395 CHF8 per pack of 20.
to CHF400 per 1,000 cigarettes, which
Turkey
Effective 1 January 2013, minimum fixed 15%, including proportional tax rates and
tax amounts and proportional tax rates revaluation rates applied in 2012 for the
for the products listed in Table (B) of List papers listed in Table (1) attached to the
(III) attached to the Special Consumption Stamp Duty Law.
Tax Law (tobacco and tobacco products)
In addition, effective from
have been rearranged and the fixed tax
22 September 2012, the Special
amounts have been announced.
Consumption Tax on alcoholic beverages
Stamp Duty Law General Communiqué and on vehicles with an engine capacity
series no. 56 was published in the Official less than 1,600 cm3 has been increased.
Gazette dated 1 January 2013, and Land registry title fees were increased to
according to the general communiqué, 0.02% from 0.0165%.
fixed tax amounts have been increased by
Ukraine
Effective 3 January 2013, Ukraine The obligation to administer the tax lies
introduced an excise tax on the disposal of with the tax agent, which, in the majority
Ukrainian securities and on transactions of cases, is the securities trader. For
involving derivatives. The tax applies derivatives transactions, the excise tax is
to sellers of securities, or persons payable by both parties to the contract.
performing transactions in derivatives, Tax rates range from 0% to 1.5% of the
regardless of whether they are resident or contract value and a number of tax
non-resident. It applies to individuals and exemptions apply.
legal entities (except state authorities).
United Kingdom
Effective 1 April 2013, air passenger price floor. Supplies of fossil fuels used
duty (APD) rates will increase in line with in most forms of electricity generation
inflation. From the same date, APD will will become liable either to the climate
be extended to business jets and smaller change levy or fuel duty from that
aircraft. Luxury business jets will be date. Such supplies will be charged at
subject to new premium rates of APD — the relevant carbon price support rate,
set at double the prevailing standard depending on the type of fossil fuel
business/first class rates of APD. used, which will be based on the average
carbon content of each fossil fuel and will
Effective 1 February 2013, amusement
reflect the difference between the future
machine license duty (AMLD) is replaced
market price of carbon and the floor price
by a new machine games duty (MGD).
determined by the UK VAT administration.
Games played on machines which are
liable to MGD are exempt from VAT. Only Also effective 1 April 2013, climate
gaming machines with cash prizes are change levy (CCL) rates will increase in
within the scope of MGD. There are two line with inflation. From the same date,
rates of MGD: the standard rate of 20% the reduced rate of CCL on electricity will
and the lower rate of 5%, calculated on be amended from 35% to 10% of the main
machines’ net takings. The lower rate of CCL rate.
MGD applies to machines with maximum
The £0.302 per liter fuel duty
stakes of £0.10 and maximum cash prizes
increase that was due to take effect on
of £8, while the standard rate applies to
1 January 2013 has been canceled. In
all other dutiable machines.
addition, the fuel duty increase that was
Effective 1 April 2013, the standard planned for 1 April 2013 will now be
rate of landfill tax (LFT) will increase by deferred until 1 September 2013.
£8 per ton to £72 per ton. However, the
Effective 1 January 2014, tobacco-free
lower rate of LFT will remain frozen at
(herbal) smoking products will become
£2.50 per ton.
liable to tobacco duty at the same rate as
Effective 1 April 2013, the rate of their tobacco counterparts. However, a
aggregates levy will increase from £2 to limited exemption will be maintained for
£2.10 per ton. herbal smoking products that are used
exclusively for medicinal purposes.
Effective 1 April 2013, the UK VAT
administration will introduce a carbon
US Virgin Islands
The fuel tax rate has increased from 7 sold or consumed in the US Virgin Islands.
cents per gallon to 14 cents per gallon. The tax is imposed on the manufacturer
The fuel tax is imposed upon the sale of or importer of the fuel.
gasoline and diesel fuel manufactured,

Uzbekistan
Effective 1 January 2013, the excise duty beverages by 20%. The rate increased for
increased on wine by 5%, on ethyl alcohol tobacco products by 25%.
by 15% and on other types of alcoholic
Vietnam
Before 15 November 2012, the regulation 15 November 2012, the Government
provided that the foreign traders without issued a regulation providing guidance for
a presence in Vietnam may register implementation of these positions.
to import goods into Vietnam without
Effective 15 November 2012,
setting up a legal entity. However, there
imported nylon (plastic) bags used
have been no detailed guidance on this
for manufacturing of exported goods
registration was issued and, in practice,
are exempted from Environment
we are not aware of any cases where
Protection Tax.
the registration was approved. From
Zambia
Effective 13 October 2012, the Zambian that offer services, as well as for new
government has suspended import duty articles and equipment used to furnish or
on tourism-related equipment as an refurbish accommodation and catering
incentive to develop the tourism industry. facilities by businesses licensed as tourism
The duty is also suspended on new motor enterprises.
vehicles purchased by tourism enterprises
Zimbabwe
Effective 1 December 2012, the following • A suspension of customs duty on
excise duty changes apply: vehicles used in tourism applies until
June 2013.
• Excise duty on locally produced clear
beer increased from 40% to 45%. • A rebate of duty applies on selected
building material donated to religious
• Excise duty is imposed on imported
organizations
clear beer at the greater of
ZWL0.45 per liter and 45%. • A rebate of customs duty applies to
fiscal devices.
• Excise duty on cigarettes increased
from ZWL10 per 1,000 to • A 25% surtax applies on selected
ZWL15 per 1,000. groceries and consumer goods, to
protect domestic producers.
• Used motor vehicles donated to
the government by international • The customs duty on chickens is
organizations on completion of now 40% or ZWL1.50 per kilogram,
projects under Technical Cooperation whichever is greater.
Agreements are exempt from 5%
excise duty.

3
Customs dut
international
Free trade agreements 96
Significant country
developments 2012–13 97
Customs duty and
international trade map 114

ty and
l trade

Free Trade
Agreements
The following Free Trade Agreements entered into force during 2012 or are slated to go
into effect during early 2013:
• Mexico and Peru (February 2012)
• Japan and Peru (March 2012)
• South Korea and United States (March 2012)
• Chile-Malaysia (April 2012)
• Colombia and United States (May 2012)
• Panama and Peru (May 2012)
• Ukraine and European Free Trade Association (Iceland, Liechtenstein, Norway and
Switzerland) (May 2012)
• Mexico and Central American Countries (Costa Rica-El Salvador-Guatemala-Honduras-
Nicaragua) (approval per country: to date, Mexico, January 2012; Costa Rico,
December 2012; Honduras, January 2013)
• Belarus-Russia-Ukraine and Commonwealth of Independent States (September 2012)
• Moldova and Commonwealth of Independent States (September 2012)
• Canada-Jordan (October 2012)
• Panama and United States (October 2012)
• Montenegro and European Free Trade Association (Iceland, Liechtenstein, Norway
and Switzerland) (September–November 2012)
• Hong Kong and European Free Trade Association (Iceland, Liechtenstein, Norway and
Switzerland) (October–November 2012)
• Indonesia and Pakistan (expected January 2013)
• EU and Colombia-Peru (expected first-quarter 2013)

Significant country
developments 2012–13
Albania
Albania has adopted the Harmonized World Customs Organization. Its use will
Tariff Schedule based on the international come into effect starting on 1 January
Harmonized Commodity Coding and 2014.
Classification System established by the
Algeria
Algeria and the EU have signed a new agreement delays the lifting of tariffs
trade agreement modifying a previous from 2017 to 2020.
2005 trade agreement; the new
Argentina
Argentina requires significant new Argentina no longer qualifies for
import documentation effective benefits under the Generalized System
1 February 2012. Argentina’s Federal of Preferences (GSP) of the United
Administration of Public Revenue States (US). Goods of Argentine origin
(Administración Federal de Ingresos entered or withdrawn from warehouse for
Públicos: AFIP) issued Resolution consumption on or after 28 May 2012
3252/2012, which requires all importers are ineligible for preferential duty rates
to submit to the tax agency additional under the US GSP.
documentation in advance of importing
Argentina and Mexico each suspended
goods into Argentina. The information
preferential duties for each other’s
provided on the Advance Import
automobiles. Argentina initially
Information Affidavit (Declaración Jurada
suspended for three years an automobile
Anticipada de Información; DJAI) will be
free trade agreement with Mexico
shared with other agencies according to
following an agreement signed between
the nature of the goods and importation
Mexico and Brazil, which Argentina
cannot take place without prior approval.
claims violates the Mercado Común del
The resolution went into effect as of
Sur (MERCOSUR)1 — Mexico Pact. Mexico
1 February 2012.
subsequently withdrew preferences for
Argentinean vehicles and parts.
Aruba
Effective 1 January 2013, the import solar-powered water heaters and other
duties were reduced to 2% for the similar appliances, washing machines,
following goods provided that specific compact fluorescent lamps and LED-
statutory requirements are met: air lamps.
conditioners, refrigerators and freezers,
1. Argentina, Brazil, Paraguay, Uruguay and Venezuela. Bolivia became an accessing member on 7 December 2012, but this is to
be ratified by the member states.

Australia
Australia’s Customs and Border provisions in the Customs Tariff Act
Protection Service issued for comment 1995. The increases are effective
a proposed amendment of the definition 1 August 2012.
of “production assist costs” in section
The Australian Customs and Border
154(1) of the Customs Act 1901 to bring
Protection Service provided notice
the definition into line with the WTO
for public comment for the Customs
Valuation Agreement.
Amendment (Miscellaneous Measures)
Australian Customs and Border Bill 2012. The bill includes a number of
Protection Notice 2012/30, dated amendments to valuation definitions
4 June 2012, announced that the in line with the Agreement on
amendments to Article 3 of the Australia Implementation of Article VII of the
— New Zealand Closer Economic Relations General Agreement on Tariffs and
Trade Agreement (ANZCERTA) entered Trade 1994 (WTO Customs Valuation
into force on 30 May 2012. Agreement) and introduces new strict
liability for bringing “restricted goods”
Australia provided partial remission of
into Australia, among others.
customs duty on liquefied natural gas
(LNG) and liquefied petroleum gas (LPG) Australia has increased the value
for non-transport purposes. of penalty units in Commonwealth
legislation, including penalties
Australian Customs and Border
imposed under the Customs Act 1901.
Protection announced that the rates of
The increase is from AU$110 to
customs and excise duties on certain
AU$170 per unit.
spirits, beer and tobacco have been
increased according to the indexation
Azerbaijan
Azerbaijan’s Cabinet of Ministers adopted of Ministers’ Decision signed on
a decree implementing a simplified 19 July 2012 went into effect 30
customs procedure for the importation days after signing and it is valid until
of goods for natural disasters and other 1 January 2014.
emergencies, live animals, radioactive
Azerbaijan’s Cabinet of Ministers
materials, perishable goods and others.
issued Decision No. 228 dated
Azerbaijan and Macedonia signed a 12 October 2012, “Rules for issuing
customs cooperation agreement. permits by customs authorities for
different customs operations or
Azerbaijan adopted a new procedure
procedures.”
for calculating customs debt for value-
added tax. Azerbaijan’s Cabinet of Ministers
issued Decision No. 353 dated
Azerbaijan exempted from VAT and
31 October 2012, “Rules for placing
customs duties goods, materials and
re-export goods undergoing customs
equipment for the construction of
procedures.”
an oil well cement plant. The Cabinet

Belarus
Belarus and Serbia signed an agreement
on mutual assistance in customs affairs.
Brazil
Brazil and the US signed a customs protect local industry. Items considered
cooperation agreement. for duty increase include tires, motors,
freight cars and consumer products.
Brazil announced plans to implement an
up to 25% duty increase on 100 items to
Canada
The Canada Border Services Agency CBSA issued Notice 12–012, effective
(CBSA) issued Customs Notice 12–001 12 April 2012, which explains new
dated 18 January 2012, which requirements for importers of certain
announced the agency’s new Mandatory regulated energy-using products.
Electronic Export Reporting Policy for
CBSA amended the Departmental
exporters.
Consolidation of the Customs Tariff
Steel and steel products imported into effective 28 September 2012
Canada are now eligible for Customs to implement certain legislative
Self Assessment (CSA) clearance and amendments, under Customs Notice
are exempt from General Import Permit 12–028.
(GIP) requirements if using CSA under
Canada and Israel signed a customs
Customs Notice 12–011. If using other
mutual assistance agreement.
customs release processes, applicable GIP
requirements must be met.

China
The Ministry of Finance’s State Council China’s General Administration of
Tariff Commission issued the 2012 Tariff Customs issued Customs Notice No.
Implementation Plan, providing non- 15, providing a revised Classification
preferential and preferential import duty Table for Goods Imported into the
rates, quotas and export tax rates. People’s Republic of China, including the
relevant tariff rates and a revised Table
China issued General Administration of
of Customs Value for Goods Imported
Customs Announcement No. 74 of 2011
into the country. The effective date is
on 22 February 2012 regarding recent
15 April 2012. The valuation table for
amendments to the China — Association
various imports is based on international
of Southeast Asian Nations (ASEAN)2
market prices, foreign market prices and
Free Trade Area rules of origin (product-
domestic prices. While customs officers
specific origin criteria).
usually accept the importer‘s valuation, in
China granted VAT and custom duty cases where the declared value is either
exemptions for non-priced equipment two times or greater, or one-half or less
imported by outward processing entities if than the value provided in the table,
such entities become foreign investment customs will determine the acceptable
corporations and meet a number of value under the applicable law.
additional requirements, according to
Mainland China and Taiwan signed
the China General Administration of
agreements on investment protection and
Customs Announcement No. 7 dated
customs cooperation.
8 February 2012.
Costa Rica
On 28 September 2012, Law 9069, The main modifications are focused on
which modified certain articles of the the administrative procedures relating to
General Customs Law, entered into force. appeals and dispute resolution.
Croatia
Croatia and Kosovo signed an economic
cooperation agreement.
2. Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Burma (Myanmar), Cambodia, Laos and Vietnam.

Customs Union of Russia, Kazakhstan
and Belarus
The Customs Union Commission was The Board of the Eurasian Economic
disbanded and replaced by the Eurasian Commission issued a resolution dated
Economic Commission as regulator of 18 September 2012 to include a number
inter-country integration within the of ozone-depleting substances on the
Customs Union and Common Economic joint list of goods subject to prohibitions
Space. or restrictions in the cases of import
or export by the member states of
The revised Customs Union single tariff,
the customs union in trade with third
which contains over 2,500 amendments
countries.
related to Russia’s accession to the WTO,
went into effect on 23 August 2012.
Cyprus
Cyprus and Russia signed a memorandum
of understanding on customs
cooperation.
Dominica
Effective 1 September 2012, the import 50% and on tobacco from 45% to 75%.
duty on firearms increased from 45% to
European Union
Council Regulation (EU) No. 1232/2011 were adopted in Council Regulation (EU)
amended the dual use export control No. 168/2012 of 27 February 2012 in
regime promulgated under Council the form of travel bans and asset freezes
Regulation (EC) No. 428/2009. The on seven Syrian cabinet ministers in
changes included provisions and addition to freezing the assets of the
requirements for a number of new EU Syrian Central Bank and banning direct
General Export Authorizations. and indirect trade in gold, precious
metals and diamonds with Syrian state
The EU adopted Council Regulation
institutions. Further amendments to
(EU) No. 36/2012 of 18 January 2012
economic sanctions on Syria were
concerning restrictive measures in view
issued by Council Implementing
of the situation in Syria and repealing
Regulation (EU) No. 410/2012 of
Regulation (EU) No. 442/2011. The
14 May 2012, Council Regulation (EU)
regulation imposed new restrictions
No. 509/2012 of 15 June 2012, and
on the Syrian oil and gas industry and
Council Regulation (EU) No. 867/2012
those participating in certain electricity
of 24 September 2012.
generating projects. Additional measures

The EU revised and expanded sanctions an additional year in Council Decision
against Iran. The new EU sanctions 2012/158/CFSP of 19 March 2012
include a phased embargo of Iranian amending Decision 2011/173/CFSP.
crude oil, petroleum products and
The EU suspended certain economic
petrochemical products targeting EU
sanctions against Burma (Myanmar)
imports, purchases and transports, as
but retained the arms embargo and the
well as related finance and insurance,
embargo on equipment which might be
and imposed asset freezes against
used for internal repression in Council
the Iranian Central Bank, eight other
Decision 2012/225/CFSP of 26 April
entities and three members of the
2012 amending Decision 2010/232/
Islamic Revolutionary Guards Corps. The
CFSP and Council Regulation (EU) No.
sanctions prohibit any EU exports of
409/2012 of 14 May 2012.
key equipment and technology for the
petrochemical sector to Iran or Iranian The European Parliament adopted
business abroad; investments and joint a resolution to revise a number of
ventures with Iranian petrochemical provisions of the EU GSP scheme
companies and trade in gold, precious including removing from the list of
metals and diamonds with Iranian public beneficiary countries those where per
bodies and the Iranian Central Bank. capita income has exceeded US$4,000
for four years in a row and countries that
The European Commission issued
have bilateral trade agreements with
Commission Implementing Regulation
the EU.
(EU) No. 80/2012 of 31 January 2012
providing customs duty relief for The EU issued Council Regulation (EU)
biological or chemical substances for No. 617/2012 of 10 July 2012 amending
which there is no equivalent production Council Regulation (EC) No. 174/2005
in the EU and where these substances are imposing restrictions on the supply of
imported exclusively for noncommercial assistance related to military activities to
purposes by public establishments Côte d’Ivoire.
or officially authorized private
The EU Commission updated a number
establishments for education or scientific
of the Community Customs Code
research.
implementing provisions in Commission
The EU extended certain sanctions Implementing Regulation (EU) No.
against Bosnia and Herzegovina for 756/2012 of 20 August 2012.
Georgia
Georgia and the European Free Trade and Liechtenstein) signed a Declaration
Association (Switzerland, Norway, Iceland on Cooperation in Trade and Investment.
Gulf Cooperation Council

The Gulf Cooperation Council (GCC) with special needs, such as crutches,
Customs Committee approved a proposal hearing aids, electronic machines for the
to eliminate duty and other customs fees blind and others.
on imported goods to be used by people

Hong Kong (SAR)
Hong Kong (a special administrative and exporters to complete declarations
region of China) and Mongolia signed a according to the recently amended Hong
customs cooperative arrangement. Kong Imports and Exports Classification
List (Harmonized System) effective
Hong Kong’s Customs and Excise
1 January 2013.
Department now require importers
India
In Circular No. 19/2012, India’s Central countries (items on the sensitive list are
Board of Excise and Customs (CBEC) subject to duty, while items on general
has ruled that because mouse pads lists are duty free).
are not essential for the functioning of
Effective 17 September 2012, India’s
the computer, they may be classified
Central Board of Excise and Customs
as neither parts nor accessories of
began requiring e-payments from
a computer, but according to their
certain importers, in Notification No.
constituent material.
83/2012-Customs.
India has reduced the number of items on
the South Asian Free Trade Area (SAFTA)
Sensitive List for non-least-developed
Japan
Japan and South Africa signed a bilateral relevant laws. The rules require a vessel
customs cooperation agreement effective operator or a non-vessel operating
3 July 2012. common carrier to electronically submit
customs information no later than
Japan customs published extensive
24 hours before departure of the vessel
information with regard to the advance
from a port of loading. Failure to comply
filing rules to be implemented by
may subject the vessel operator or carrier
March 2014 under a recent amendment
to criminal and civil penalties.
of the Customs Tariff Law and other
Kazakhstan
Kazakhstan and the United Arab Emirates
signed a customs cooperation agreement.
Kenya
Kenya and Ethiopia signed a special economic ties and developing trade and
status agreement aimed at promoting investment between the two countries.
Laos
Laos joined the WTO on 2 February 2013.

Liberia
Liberia exempts from customs duties clinics and hospitals that are deemed by
fuel imported for use by the Liberia the Minister of Finance to be inadequately
Electricity Corporation (LEC), the Liberia covered by Government’s budgetary
Broadcasting System (LBS), the National appropriation or subsidies.
Transit Authority (NTA), and schools,
Mexico
Mexico joined the Wassenaar definition of “direct transport” of
Arrangement effective 25 January 2012. originating products and providing
This makes it the 41st nation to adopt explanatory notes and examples on
Wassenaar-based export controls. the topic.
Mexico amended the list of goods for Mexico increased duties (from 0% to up to
which the importation, exportation, entry 20%) on cars, auto parts and machinery
or exit is subject to health regulations, imported from Argentina after Argentina
amending the preceding accord, suspended the ACE-55 (ACE: Acuerdo de
which establishes the classification Complementación Económica — Economic
and codification of merchandise and Complementation Agreement) trade
products subject to health regulations agreement. The duty increase is effective
administered by the Secretariat of Health retroactively from 26 June 2012.
(23 March 2012).
The Nuclear Suppliers Group (NSG)
Mexico and Brazil signed an agreement, admitted Mexico as an Observer State
effective 19 March 2012, to limit trade in at the NSG Plenary held in Seattle in
vehicles between the two countries over June 2012. The Mexican government
the next three years to make up for the already has amended certain export
current trade deficit favoring Mexico. control requirements in line with the
standards established by the NSG.
Mexico signed customs cooperation
agreements with China, the Philippines, Mexico’s President has issued a decree
Italy and South Korea. amending duty rates under the General
Tax on Imports and Exports Law. The
Mexico and Norway issued a Protocol
amendment affects certain subheadings
effective 1 August 2012 to their
from Chapters 61 to 64 of Mexico’s tariff
agriculture agreement amending the
Schedule, effective 1 January 2013.
Moldova
Moldova’s Parliament ratified 27 September 2012. The Parliament
the country’s membership in the rejected a proposal to join the Russia–
Commonwealth of Independent Belarus–Kazakhstan customs union.
States (CIS) free trade agreement on

Nigeria
The Nigerian Government announced • Commercial aircraft and aircraft spare
through the 2013 budget proposals the parts attract 0% duty
following tariff measures effective
• Machinery and equipment imported for
1 January 2013:
use in the solid minerals sector attract
• An import duty of 10% and 20% 0% duty.
applies to raw sugar and refined sugar,
• Completely knocked-down components
respectively.
(CKD) for mass transit buses of at least
• An import duty of 20% applies to both 40-seater capacity attract 0% duty.
brown and polished rice.
Pakistan
Pakistan and India signed three trade agreement and a redress of trade
agreements: a customs cooperation grievances agreement.
agreement, a mutual recognition
Peru
Peru promulgated a decree indicating procurement projects without the
which foreign companies from countries need for a local subsidiary. Peru is not
that have a free trade agreement with a signatory of the WTO Government
Peru may participate in Government Procurement Agreement.
Russia
Russia joined the WTO on devices” under heading 8526 subject to
22 August 2012, becoming its 5% duty rate. The Federal Antimonopoly
156th member. Service claims the classification should
not be different depending solely on
Russia adopted a new customs tariff
the brand of the merchandise and has
policy for 2013–15 taking into account
initiated action against the Customs
Russia’s obligations under the protocol of
Service.
its accession to the WTO.
The Council of the EU has
Russia’s Federal Customs Service was
approved the Agreement signed on
accused of giving unfair preferential
16 December 2011 between the EU
treatment to Apple iPads with GPS (global
and the Government of the Russian
positioning system) by classifying them
Federation on trade in parts and
as “automatic data processing machines”
components of motor vehicles between
under heading 8471, which is duty free,
the EU and the Russian Federation.
and classifying similar products from
other manufacturers as “navigation

Saudi Arabia
Saudi Arabia and Turkey signed a customs
South Korea
South Korea lifted a ban on imports from South Korea and the United Arab
Canada of beef products from cattle more Emirates signed a customs technical and
than 30 months old. The ban was imposed administrative cooperation agreement.
in 2003 following a report of a case of
“mad cow disease” (bovine spongiform
encephalopathy) in Canada.
Switzerland
In line with the e-government strategy Switzerland is a member of European
of the Swiss customs authority, new Free Trade Agreement (EFTA) that has
regulations related to the customs entered into a free trade agreement with
clearance declaration came into Hong Kong as of 1 October 2012. The
force on 1 January 2013. Customs free trade agreement is concluded on a
clearance declarations must now be filed multilateral basis between the contracting
electronically via the customs declaration parties and makes tariff preferences
system “E-dec” both for imports and for goods in Chapters 25 to 97 of the
exports of goods. With a few exceptions, customs tariff, for processed goods, and
documents in paper form are no longer for fish and seafood. Furthermore, the
accepted. agreement contains a bilateral clause
between Hong Kong and Switzerland for
tariff preferences for certain agricultural
product in Chapters 1 to 24.
Taiwan
Taiwan and Germany signed a customs

Thailand
In December 2012, the Thai Cabinet EU and forwarded the proposal to
approved a proposed free trade Parliament.
agreement between Thailand and the
Turkey
Turkey and the Netherlands signed a
memorandum of understanding for
cooperation in customs matters.
Ukraine
Ukraine and Argentina signed a customs Ukraine and the Eurasian Economic
cooperation agreement aiming to Commission of the Union of Russia,
prevent, investigate and end customs Belarus and Kazakhstan signed a
violations. memorandum on trade and economic
cooperation, and cooperation in the field
Ukraine’s new Customs Code went into
of technical regulation.
effect on 1 June 2012.
The President of Ukraine has approved
The Ukraine-EU Strategic Framework for
an action plan for 2012–21 in line
Customs Cooperation went into effect on
with Ukraine’s commitments under
25 June 2012.
the Prohibition of the Development,
Ukraine’s President ratified a free trade Production, Stockpiling and Use
zone agreement with the Commonwealth of Chemical Weapons and on their
of Independent States (CIS).3 Destruction.
3. The CIS currently includes Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Uzbekistan;
Turkmenistan and Ukraine are unofficial members; Georgia withdrew in 2009.

United Arab Emirates
The United Arab Emirates (UAE) lifted 2006 following a US case reported in
a ban on imports from the US of beef 2003 of “mad cow disease” (bovine
products from cattle more than 30 spongiform encephalopathy).
months old. The ban was imposed in
United Kingdom
The United Kingdom (UK) revised its English Campaign to make licenses
policies to indicate that no export licenses more user-friendly. Additionally, the new
for military or dual-use goods and version, which became effective on
technology intended to be supplied to 31 July 2012, no longer permits
Argentina’s armed forces will be granted the export or transfer of technology
in the future. controlled under category ML22 of the
UK Military List.
The United Kingdom’s HM Revenue
and Customs (HMRC) has issued a new The ECO published a directive, effective
beginners Guide for Importing and 10 August 2012, which implements
Exporting. the EU’s Directive 2009/43/EC (Intra-
Community Transfer or “ICT” Directive),
The Export Control Organisation (ECO) in
related to intra-EU transfers of defense-
the Department of Business, Innvoation
related products.
and Skills (BIS) has updated the UK
Strategic Export Control Lists: The The United Kingdom’s rules of origin for
Consolidated List of Strategic Military various countries are provided in HMRC
and Dual-Use Items That Require Export Notice 828 Tariff Preferences: Rules of
Authorization (effective 15 June 2012) Origin for Various Countries.
to reflect EU updates to the Dual Use List.
The ECO published information regarding
The ECO also amended 12 open general
a number of revised sanctions measures
export licenses (OGELs) to reflect the
that the EU has issued recently against
updates.
Belarus, Eritrea, Iran, Somalia and Syria.
The ECO has published a revised version
of the OGEL (Military Components) in
plain English in line with the UK’s Plain

United States of America
The Customs and Border Protection The US established the Export
(CBP), HQ Quota Branch, Textile/ Enforcement Coordination Center, which
Apparel Policy and Programs Division, coordinates export control enforcement
published Quota information for the matters across various federal agencies.
trade community, 2012 Quota Book
The US President, Barack Obama,
Transmittals.
issued Executive Order 13601 of
CBP issued revised guidance for post- 28 February 2012 for the establishment
importation preference program claims of the Interagency Trade Enforcement
under 19 USC 1520(d) under the Center. The purpose of the center is
following free trade agreements: to coordinate matters relating to the
enforcement of US trade rights, including
• The North American Free Trade
intellectual property rights, under
Agreement (NAFTA)
international trade agreements and the
• The Chile Free Trade Agreement (CFTA) enforcement of domestic trade laws of
the US Trade Representative (USTR) and
• The Oman Free Trade Agreement a number of other executive agencies of
(OFTA) the US government.
• The Dominican Republic-Central The US has made many changes to its
American Free Trade Agreement economic sanctions against Iran. Among
(DR-CAFTA) many notable changes, the Department
• The Peru Trade Promotion Agreement of the Treasury’s Office of Foreign
(PTPA) Assets Control (OFAC) has amended the
Iranian Financial Sanctions Regulations
CSMS #11-000277 provides that a and reissued them in their entirety,
post-importation preference claim may implementing sanctions with respect to
be made within one year of the date the Central Bank of Iran and designated
of importation if a claim was not made Iranian financial institutions.
at entry summary. Changes to the
entry summary that bear directly on CBP has amended the Customs
the preference claim include making a Regulations, 19 CFR Parts 4 and 24,
tariff classification or valuation change effective 25 April 2012, to make the
on a line in which a preference claim is owner or master of a US vessel liable for
being made, if that valuation change interest where duties associated with the
enables the good to meet the terms of purchase of equipment for, or repair to,
the preference program. The revised the vessel while it is outside the US are
guidance further notes that such claims not paid on time.
should be processed without requiring a The US Department of State issued a
post-entry amendment (PEA), a post- final rule amending the International
summary correction (PSC) or a 19 USC Traffic in Arms Regulations (ITAR), 22
1514 protest. CFR Parts 120, 123, 124, 126, 127 and
CBP updated the Bonded Warehouse 129, to implement the Defense Trade
Manual for Customs and Border Cooperation Treaty between the US and
Protection Officers and Bonded the United Kingdom.
Warehouse Proprietors.

Additionally, the rule amends the section suspected of bearing a counterfeit mark,
pertaining to the Canadian exemption for the limited purpose of obtaining the
and adds Israel to the list of countries and right holder’s assistance in determining
entities that have a shorter certification whether the mark is counterfeit.
time period and a higher dollar value
The US and the EU signed an agreement
reporting threshold.
to recognize each other’s certified trusted
CBP issued a notice to announce that, traders. Companies certified by the EU’s
effective 29 September 2012, the Authorized Economic Operators (AEO)
Automated Commercial Environment or the US Customs-Trade Partnership
(ACE) will be the only CBP-approved Against Terrorism (CTPAT) regimes will be
electronic data interchange (EDI) for able to benefit under the agreement.
submitting required advance information
The US comprehensively revised
for ocean and rail cargo.
regulations under the Foreign-Trade Zones
Wine, distilled spirits and malt containing Act of 1934, as amended (15 C.F.R. part
cochineal extract and carmine will be 400), concerning the authorization and
required to disclose on their labels regulation of foreign trade zones and
the presence of these color additives, zone activity in the US.
effective 15 May 2012. The rule applies
In May 2012, the US issued a landmark
equally to domestic and imported alcohol
customs ruling that allows retroactive
beverage products.
transfer pricing adjustments made for tax
The Department of Commerce Bureau of purposes to be taken into consideration
Industry and Security issued a final rule for customs valuation purposes when
that amends the Export Administration certain criteria are met at the time of
Regulations (EAR) creating a new Export importation.
Control Classification Number (ECCN)
As part of an Export Control Reform
0Y521 Series, Items Not Elsewhere
Initiative, the Department of Commerce,
Listed on the Commerce Control List
Bureau of Industry and Security (BIS), and
(CCL) (15 CFR Parts 732, 734, 738,
the Department of State, Directorate of
740, 742 and 774). The new ECCN is a
Defense Trade Controls, issued numerous
temporary holding classification, which
proposed rules to address a number
is equivalent to US Munitions List (USML)
of issues pertaining to the transition
Category XXI (Miscellaneous Articles).
of control to the (EAR) of items the
This classification will be used until the
President determines no longer warrant
government either determines a long-
control under International Traffic in Arms
term control according to multilateral
Regulations (ITAR). If these changes are
agreements or drops the item from
adopted, many items would be transferred
the CCL.
from the US Munitions List to new
US Customs regulations (19 CFR Parts provisions of the Commerce Control List.
133 and 151) will be amended to provide
a pre-seizure procedure for disclosing
information about imported merchandise

The US has continued for an additional CBP issued new or updated Informed
year certain economic sanctions on Compliance Publications: Distinguishing
Myanmar but has also issued several Bolts from Screws and Hand Tool Sets
general licenses greatly expanding Classified under Subheadings 8205.90.00
allowed trade. and 8206.00.00 and What Every Member
of the Trade Community Should Know
CBP issued a final rule to amend the
About: Instruments of International
recordkeeping requirements as they
Traffic.
apply to customs brokers. Effective
9 July 2012, customs brokers may The US introduced additional economic
store records at any location within the sanctions against Somalia by prohibiting
customs territory of the US. In the case of all importation into the US of charcoal
electronic records, the server where such from Somalia and by blocking all property
records are stored must be physically and property interests in the US of certain
located within the customs territory of the persons and entities, including persons
US where CBP has jurisdiction to serve a and entities who have assisted financially
summons. Additionally, customs brokers, or otherwise any persons whose property
who are not also importers of record, will has been so blocked.
be exempt from the requirement to retain
In August 2012, the US passed the Iran
certain import records in their original
Threat Reduction and Syria Human
format for the 120-day period after the
Rights Act of 2012. The legislation is
release or conditional release of imported
notable because it broadens the range
merchandise.
of situations where non-US entities are
CBP posted new instructions for subject to US economic sanctions rules:
completing CBP Forms 301 and 301A
• It effectively makes activities conducted
(Customs Bond).
by non-US entities that are owned
As part of the Export Control Reform or controlled by US entities subject
Initiative, the Department of Commerce, to certain aspects of US economic
Bureau of Industry and Security (BIS), sanctions law with respect to Iran.
has issued a proposed rule, which sets
forth a common definition of the term • It broadens the circumstances and/or
‘‘specially designed’’ for use in the Export penalties where a non-US entity may
Administration Regulations (EAR) and the be directly targeted by US sanctions
International Traffic in Arms Regulations for certain types of activities related
(ITAR). The State Department has issued to Iran’s petroleum, petrochemical,
a parallel proposed rule. mining, energy, insurance and shipping
industries.
The US changed its tariff schedule
to clarify that certain multifunction • It requires public disclosure of certain
computer monitors are to be considered business activities related to Iran by
computer monitors and not television entities that are registered “issuers”
apparatuses (and thus effectively on US stock exchanges even if such
accorded duty free treatment under the entities are otherwise non-US.
information technology agreement).

United States (continued)
The US Securities and Exchange CBP has issued a final rule to implement
Commission (SEC) adopted on the preferential tariff treatment and other
22 August 2012 a final rule under the customs-related provisions of the US-Peru
Dodd-Frank Wall Street Reform and Trade Promotion Agreement.
Consumer Protection Act with regard
The US Commerce Department
to conflict minerals (any mineral so
has completed a critical technology
designated by the Secretary of State to
assessment on night vision focal plane
be financing conflict in the Democratic
arrays, sensors and cameras, which
Republic of the Congo or an adjoining
assess the impact of export controls on
country; conflict minerals are cassiterite,
these technologies.
columbite-tantalite, gold, wolframite
or their derivatives, such as tantalum, The BIS has issued a final rule that
tin or tungsten). The final rule requires amends the Export Administration
an annual report disclosing any use of Regulations (EAR) with regard to the
conflict minerals and descriptions of authorization of VEU provisions. The
due diligence measures undertaken to final rule, effective 18 January 2013,
establish the origin and chain of custody introduces a requirement for notice of
of such minerals, including a third-party export, re-export or transfer (in-country)
private sector audit and certification. and clarification regarding termination of
conditions on VEU authorizations.
CBP issued a general notice, effective
5 October 2012, US and Canadian The US Department of State issued a final
resident importers that successfully rule to amend the International Traffic in
complete a focused assessment (FA) Arms Regulations (ITAR) designating the
may within 12 months from the date Islamic Republic of Afghanistan as a major
of the FA report apply to transition into non-NATO ally. The rule also provides for
the Importer Self-Assessment Program two defense export license exemptions.
without further CBP review, subject to a The rule is effective 31 December 2012.
number of additional requirements.
Vietnam
Vietnam and Argentina signed a Customs without setting up a legal entity there;
Cooperation Agreement. however, there has been no detailed
guidance on this registration and,
Vietnam ratified the ASEAN Agreement
in practice, we are not aware of any
of Customs on 30 March 2012.
cases where the registration has been
Prior to 15 November 2012, the approved. Effective 15 November 2012,
regulation provided that foreign traders the Government issued a regulation
without a presence in Vietnam could providing guidance for implementation of
register to import goods into Vietnam this provision.

Zimbabwe
Effective 16 November 2012, the • Additional duties are to be imposed on
customs duty on imported chicken raw materials, capital and intermediate
increased from 40% to the greater of goods used for mining that can be
ZWL1.5 per kg and 40% . A duty rebate manufactured locally.
is extended to spare parts for fiscalized
devices imported by approved suppliers • The Treasury is to look into extending a
(a rebate already applies to fiscalized rebate of duty to second-hand vehicles
devises imported by approved suppliers). and new clothing sourced by charitable
organizations. (Currently the rebate is
Effective 1 January 2013, the customs restricted to new vehicles and second-
duty on a range of inputs is to be hand clothing.)
reviewed including the following tariff
classifications: 25239000, Other • The Treasury is to look into removing
hydraulic cements, 30049090 Other the need for a driver’s license for
medicaments, 30043990 Medicaments physically challenged persons to import
containing hormones, 40169330 Oil motor vehicles under rebate, as some
seals, 48070090 Other paper board, of the intended beneficiaries cannot
69039090 Other refractory ceramic drive manual transmission vehicles.
goods, 73181500 Nuts bolts and
• A further review of the tariff levels of
washers, 73182200 Washer, 74112910
imported finished products is proposed
Bushing materials and 76051100
with the participation of relevant
Aluminum coils.
Ministries, the Competition and Tariff
Other provisions include: Commission and Zimra (the Zimra
customs authority).
• A rebate of duty is to be granted
to pharmaceutical companies on The following customs authority (Zimra)
essential imported raw materials used reform programs are to be carried out
in the manufacture of pharmaceutical in 2013:
products.
• Automation of the Beitbridge
• The suspension of customs duty on Border Post
motor vehicles imported by approved
• The deepening of post-clearance audit
Safari Operators is extended for six
months. • The strengthening of risk management
measures
• A rebate of duty on goods imported
by religious organizations for religious • Curbing the abuse of SADC Rules of
purposes is extended to building Origin certificates
materials to the extent that such
• Implementation of standard valuation
materials are not locally produced.
methods for second-hand vehicles
• A surtax of 25% is to be imposed on
the importation of selected imported
finished products, such as soap, meat
products, beverages, dairy products
and cooking oil.

Customs and international trade —
free trade agreements
United States Canada

March 2012 with South Korea. October 2012 with Jordan.
May 2012 with Colombia.
October 2012 with Panama.
Nicaragua
With Mexico and other Central American
Countries (Costa Rica, El Salvador, Guatemala
and Honduras) to be ratified.
Guatemala
countries (Costa Rica,El Salvador, Honduras and
Nicaragua) to be ratified.
Honduras Mexico
January 2013 with Mexico and other Central January 2012 with Central
American countries (Costa Rica, El Salvador, American countries (Costa Rica,
and Guatemala and Nicaragua). El Salvador, Guatemala, Honduras
and Nicaragua).
February 2012 with Peru.
El Salvador
countries (Costa Rica, Guatemala, Honduras
and Nicaragua) to be ratified.
Costa Rica
December 2012 with Mexico and other Central
American countries (El Salvador, Guatemala,
Honduras and Nicaragua).
Colombia
May 2012 with the United States.
Expected first-quarter 2013 with the European
Union and Peru.
Panama
May 2012 with Peru.
October 2012 with the United States.
Peru
February 2012 with Mexico.
March 2012 with Japan.
May 2012 with Panama.
Chile
Expected first-quarter 2013 with the European
Union and Colombia. April 2012 with Malaysia.

Russia European Free Trade Association (Iceland,
September 2012 with Belarus, Ukraine and the Liechtenstein, Norway and Switzerland)
Commonwealth of Independent States.
May 2012 with Ukraine.
Belarus September–November 2012 with Montenegro.
September 2012 with Russia, Ukraine and the October–November 2012 with Hong Kong.
Commonwealth of Independent States.
Commonwealth of Independent States
European Union
September 2012 with Belarus and Ukraine.
Expected first-quarter 2013 with Colombia
and Peru. September 2012 with Moldova.
Pakistan
Expected January 2013
with Indonesia.
South Korea
March 2012 with the United States.
Japan
March 2012 with Peru.
Hong Kong
October–November 2012 with the
European Free Trade Association.
Indonesia
Expected January 2013 with
Pakistan.
Jordan
October 2012 with Canada.
Malaysia
April 2012 with Chile.
Moldova
September 2012 with the
Commonwealth of
Independent States.
Montenegro Ukraine
September–November May 2012 with the European Free Trade
2012 with the European Association.
Free Trade Association.
September 2012 with Belarus, Russia and
the Commonwealth of Independent States.

Notes

Notes

Contacts
Philip Robinson Global Director —
+41 58 289 3197
[email protected]
Indirect Tax
Jeffrey N. Saviano
New York +1 212 773 0780
Americas
Boston +1 617 375 3702
[email protected]
Robert Smith
+8621 2228 2328 Asia-Pacific
[email protected]
Gijsbert Bulk Europe, Middle East,

+31 88 40 71175 India and Africa
[email protected] (EMEIA)
William M. Methenitis
+1 214 969 8585
[email protected]
Customs and
International Trade
Neil Byrne
+353 1 221 2370
[email protected]

Ernst & Young
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Indirect tax in 2013

A review of global indirect tax

Indirect Tax in 2013 1

2 Indirect Tax in 2013

Indirect Tax in 2013 3

4 Indirect Tax in 2013

2Excise and other

114 Indirect Tax in 2013 5

6 Indirect Tax in 2013

It is probably unprecedented in the and services — consisting primarily of

Figure 1. Tax structures in the OECD area1

1965 1975 1985 1995 2005 2009

Personal Corporate Social security General consumption Specific consumption

Source: OECD Tax Database

1. Percentage share of major tax categories in total tax revenue.

Indirect Tax in 2013 7

1. VAT/GST rates are increasing.

8 Indirect Tax in 2013

Around the world, many countries are Broader base

Higher VAT/GST rates

10 Indirect Tax in 2013

duty on sweets and ice cream, and in Taxing financial transactions

2. Environmental Taxation, A guide for Policy Makers, available at http://www.oecd.org/greengrowth/

Indirect Tax in 2013 11

12 Indirect Tax in 2013

internet downloads or telecom services), Not available

Indirect Tax in 2013 13

The growing importance of indirect taxes As a consequence, tax administrations in

14 Indirect Tax in 2013

Indirect Tax in 2013 15

16 Indirect Tax in 2013

Indirect Tax in 2013 17

18 Indirect Tax in 2013

1 January 2016: single uniform

13 January 2014: standard rate

20 Indirect Tax in 2013

1 October 2015: consumption tax rate

1 January 2014: the 7% reduced rate (which

Indirect Tax in 2013 21

22 Indirect Tax in 2013

In the meantime, the service tax legislation

1 January 2013: the period within which

Indirect Tax in 2013 23

24 Indirect Tax in 2013

Indirect Tax in 2013 25

26 Indirect Tax in 2013

Indirect Tax in 2013 27

28 Indirect Tax in 2013

Indirect Tax in 2013 29

30 Indirect Tax in 2013

Indirect Tax in 2013 31

32 Indirect Tax in 2013

Indirect Tax in 2013 33

34 Indirect Tax in 2013

1. “VAT — Review of existing legislation on invoicing,” European Commission, ec.europa.eu/

2. Council Directive 2010/45/EU, Official Journal of the European Union, 2010

Indirect Tax in 2013 35

Previous rules Directive 2010/45/EU new rules

Figure 2. Comparison of the previous and new rules related to storage

2. Environmental Taxation, A guide for Policy Makers, available at http://www.oecd.org/greengrowth/

1. “VAT — Review of existing legislation on invoicing,” European Commission, ec.europa.eu/

2. Council Directive 2010/45/EU, Official Journal of the European Union, 2010