Worldwide: February VAT Roundup: Updates From Costa Rica, UAE And Brexit Refund Deadline Looming

Last Updated: 13 March 2019
Article by Rob Hutchinson

Businesses in Costa Rica have only a few months to prepare for the introduction of VAT while we know more about the UAE's planned VAT recovery scheme for foreign businesses. And refund applications to and from the UK will only be possible until 29 March.

TMF Group's global tax team is pleased to bring you a round-up of some key VAT news and wider tax bulletins from the past month. If you have questions or need more information about any of the below, simply make an enquiry with us.

UAE - VAT recovery for foreign businesses

The UAE Federal Tax Authority (FTA) has published further details on the planned scheme to allow VAT recovery for foreign businesses. In the guide the FTA sets out four conditions which foreign firms will be required to fulfil in order to be able to recover the VAT incurred. 

  • The foreign businesses must not have a place of establishment, or fixed establishment, in the UAE or in any of the other VAT-implementing GCC states.
  • They must not be considered a taxable person in the UAE.
  • They must be registered as an establishment with a competent authority in the jurisdiction in which they are established.
  • They must be from a country that implements VAT and that reciprocates VAT refunds to UAE businesses under similar conditions.

The period of each refund claim shall be a calendar year (eg. 1 January 2018 - 31 December 2018). For claims in respect of the 2018 calendar year, refund applications can be made from 1 April 2019. The opening date for refund applications in subsequent calendar years will be 1 March (ie. for the period 1 January 2019 - 31 December 2019, applications will be accepted from 1 March 2020).

The minimum claim amount of each VAT claim that can be submitted should be AED 2,000 (approx. EUR 480). This can comprise of a single purchase or multiple purchases.

The FTA will issue more detailed guidance on the application process in the coming months although it is expected to resemble the VAT refund scheme in the EU. We will of course keep you updated. Clarification is also still to come on whether original tax invoices (eg. hotel bills) will be required as part of the application, so for now it is advised that these are retained.

Costa Rica - draft regulations for new VAT

Costa Rica's Ministry of Finance has published draft regulations for the implementation of the country's new VAT system. The new system, which was introduced by Law No. 9635 of 3 December 2018, will replace the current sales tax system starting from 1 July 2019. 

The draft regulations expand upon the rules introduced in the Law, including detailed rules concerning the scope of supplies subject to VAT, including cross-border digital services, the rules for taxable events and time of supplies, the taxable basis, the rates, the registration and return requirements, tax credits, etc. 

The draft regulations also contain certain transitional provisions for going from the sales tax system to the VAT system.

Poland - VAT split payment system

The EU Competitiveness Council has approved a Council implementing decision authorising Poland to introduce a split payment system for the payment of VAT. 

Poland's split payment system is meant to reduce VAT fraud by splitting B2B payments so that the VAT due on an invoice at the time of payment is directly deposited into a restricted VAT account supervised by the tax authority, and the net amount is deposited in the supplier's normal bank account. 

The system was initially implemented on a voluntary basis from 1 July 2018, with Poland planning to make the system mandatory from 2019. With the implementing decision, Poland is now authorised to make the system mandatory from 1 March 2019 to 28 February 2022. It is expected that rules for making the system mandatory will be issued soon.

Norway - VAT recovery for foreign businesses

The Norwegian Tax Administration has announced, with immediate effect, that foreign businesses will no longer need to provide original invoices to accompany their VAT refund applications. Instead, they will accept copies of invoices, credit memos and print-outs of electronic invoices received by email. 

Norway will not return submitted invoices and supporting documents after processing, unless this is specifically requested by the applicant.

Due to the changes the application form, guidelines and website will all soon be updated but until otherwise informed, the current application form should be used. The deadline for refund applications relating to calendar year 2018 remains 2019.

EU and UK - cross-border VAT recovery

As we discussed in a previous article, EU Directive 2008/09/EC (formerly the 8th Directive) allows EU businesses to claim refunds of VAT incurred in other Member States through a coordinated electronic system. If the United Kingdom leaves the European Union without an agreement on 29 March 2019, then UK businesses will no longer have access to this EU VAT refund system. Conversely, EU businesses will no longer be able to make VAT recovery claims to the UK through their national portal. 

February saw the publishing of guidance for businesses by tax offices across the EU, including from Her Majesty's Revenue and Customs (HMRC) in the UK. You can read the full details here.

EU - reduced VAT on electronic publications 

The Swedish government has submitted a legislative proposal to reduce the VAT rate on electronic publications from 25% to 6%. The 6% rate would apply to the electronic equivalents of publications which, in printed form, are taxed at the 6% rate, including newspapers, magazines, and books. However, publications that that consist mainly of advertising, video, or music content would not be covered by the reduced rate.

As proposed, the reduced 6% rate would apply from 1 July 2019.

This follows similar proposals and legislation by Austria, Luxembourg, the Netherlands and Portugal. All of which follows the decision taken by the European Commission last year, amending the VAT Directive, to allow for the alignment of VAT rates for electronic and printed publications at national level within the EU.

Key takeaways

Tax compliance is among one of the biggest challenges for international businesses, and failure to adhere to changing local rules poses a notable threat.

Businesses in Costa Rica now have only a few months to get ready for the introduction of VAT and will need to assess the preparations they need to make.

If you are a company who does a lot of business in the UAE and wish to reclaim VAT incurred on your employee expenses there, you will need to make sure you are in possession of the original invoices/receipts.

Meanwhile, a no deal Brexit would mean electronic VAT refund applications to and from the UK will only be possible until the 29 March.

TMF Group's VAT services team and in-country tax experts can provide you with support in understanding the changing rules, and what they mean for your enterprise.

Contact us to find out how we can help.

Download your free copy of our Brexit Snapshot report.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Country
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions