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InfoCourier - November 2019

InfoCourier - November 2019

InfoCourier provides a monthly overview of the latest changes in legislation.

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Joel Zernask

Partner, Head of Tax Services

KPMG Baltics OÜ

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InfoCourier - November 2019

VAT Act amendments expected in 2020

A bill on amendments to the Value-Added Tax Act is currently undergoing the third reading in the Riigikogu. The amendments concern primarily the businesses supplying goods to another member state with the intention of warehousing for a known customer (call-off stock) and the businesses participating in a chain transaction (successive supplies of the same goods). The bill provides more detailed guidance as to how to treat such supplies for tax accounting purposes. The aim of the amendments is to harmonise the VAT treatment of these supplies at the EU level, and to transpose the revised EU VAT Directive into national law. Further, the definition of investment gold is specified to include only the gold of the quality acceptable for trading on the bullion market.

The following amendments are proposed with regard to cross-border supplies:,

1) specification of the conditions that must be met for the application of call-off stock arrangements. When the goods are moved to another member state under a call-off stock arrangement, ownership remains with the supplier, but the goods are to be called off by a known customer within a 12-month period. The bill provides more detailed rules on the treatment of call-off stock for tax accounting purposes and the obligation to provide information on such supplies in the report on intra-Community supply. The proposed changes should help to avoid having to register for VAT in another member state where goods are held in the call-off stock;

2) specification of the conditions that must be met for qualifying a supply as an intra-Community supply of goods in a chain transaction, i.e. the direct transport from the first supplier to the last customer in another member state, comprising successive supplies of the same goods. A zero-rated intra-Community supply of goods is a transaction in which goods are dispatched or transported by the supplier or the intermediary from Estonia to another EU country. If the goods are transported by an intermediary who holds Estonian VAT registration in Estonia, and if the intermediary has communicated the VAT identification number to the supplier, the supply of the goods by the intermediary is treated as an intra-Community supply;

3) a provision is added requiring that a zero-rated intra-Community supply of goods must be duly reported in the report on intra-Community supply.

A list of documents accepted as evidence of dispatch or transport to another EU country has been added to Implementing Regulation (EU) No 282/2011, which is directly applicable in all EU countries. A person applying the zero rate to a transaction must be in possession of at least two items of non-contradictory evidence confirming the transport of the goods.

The amendments are expected to enter into force on 1 January 2020.

The bill and the details of the legislative process are available here (in Estonian).

Additional information: Tax Advisor Merike Oja, moja@kpmg.com

Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act

A bill on amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act is currently undergoing the second reading in the Riigikogu. The bill changes the rate of excise duty on cigarettes and smoking tobacco and specifies the application of the act with regard to tobacco products intended for consumption by heating and the revenue stamping arrangement.

The bill reduces the cigarette excise rise initially planned for 2020 from close to 10 percent to 5 percent, in order to curb cross-border trade with Latvia. For the years 2021 to 2023, the bill foresees a yearly increase of close to 5 percent.

The rise in excise duty on smoking tobacco for 2020 remains unchanged at 8 percent planned earlier. A rise of 8.3 percent is foreseen for 2021, so that smoking tobacco would be taxed at a rate equal to cigarettes. The excise duty on smoking tobacco is to increase 5 percent in 2022 and 2023.

The change does not impact the increase rates decided earlier for other excise goods. Excise duty on both liquefied petroleum gas (LPG) and natural gas is increased by 25 percent in 2020, compared with the current rate.

The provisions on revenue stamping foresee that a business without a excise-taxable status and a registered consignee must have obtained revenue stamps by the time when the excise goods are received from another member state and affix the stamps immediately to the goods. In case the revenue stamps have not been ordered in time and are not available at the time when the excise goods are received, the goods need to be stored in an excise warehouse.

The amendments are expected to enter into force on 1 January 2020, and the amendments concerning revenue stamping on 1 July 2020.

The bill is available here (in Estonian).

Additional information: Tax Advisor Merike Oja, moja@kpmg.com

Useful links

KPMG Digital Economy Tax Tracker

KPMG Digital Economy Tax Tracker is a useful finance app that features country-specific information, latest news and insights on indirect taxes and tax issues in the digitalised economy for almost 50 countries. Available for free download on App Store / Google Play (or search for „Digital Economy Tax Tracker“).

2019 Asia Pacific indirect tax guide

What is the standard VAT rate in Taiwan? How long does it take to obtain a refund in the Philippines? Is voluntary registration possible in Sri Lanka? These and other questions about indirect taxes are answered in the KPMG summary table of 20 countries in Asia-Pacific.

Indirect taxes – looking back and looking ahead

Has there been a dramatic increase in VAT rates over the past six years? Does every country have their own VAT system today? How has technology changed tax landscape? Are VAT returns disappearing from use? How can we use blockchain to combat VAT fraud? Will VAT be applied to financial services? See the KPMG article for an insight into changes effecting indirect taxes over the past six years and for predictions as to what could be the most significant changes in next 10 years.

Tax rates around the world (KPMG Tax Rates Online)

Use Tax rates online, the handy online tool, to compare corporate, indirect, individual income, and social security tax rates within a country or across multiple countries.

© 2020 KPMG Baltics OÜ, an Estonian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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