VAT Tax Rates

According to the media an administrative court in Spain has nullified 5.1 billion EUR worth of VAT tax assessments sent out to taxpaying businesses from 2006 through 2008.

The 5.1 billion, EUR includes assessments and related penalties.  Apparently, the agency based assessment on calendar years, when the law requires that it be done on a monthly or quarterly basis.
 
The 5.1 billion EUR will have to be returned to over 480,000 entities who were charged the tax. But the Treasury hopes to reassess using the required monthly and quarterly periods.

According to the media the Estonian government has approved the following draft amendments to the country’s VAT Act:

• VAT payers whose turnover does not exceed €200,000 would be entitled to use cash-basis VAT accounting; The amendment is based on EC Council decision 2009/1022 of December 15, 2009, which authorizes Estonia to apply a measure derogating from
article 167 of EU VAT Directive (2006/112/EC).

• For anti-evasion purposes, taxation by reverse charge would be extended to the
supply of waste metal and real estate.

• The special tax regime applicable to cross-border supplies of natural gas and
electricity via network would also be extended to heating and cooling energy. Under
the special tax regime, the place of supply of heating and cooling energy would be the
place where the customer is established. This amendment would implement changes
introduced to the EU VAT Directive by Council Directive 2009/162/EC.

If adopted, the amendments will enter into force on January 1, 2011.

The counties of Hanover, Onslow, and Wilkes will impose an additional 0.25% sales tax effective 1 October 2010. Currently, 12 other counties have a county sales and use tax rate of 2.25%. The increases will help offset budget deficits.

As noted in the July Sales and Use Tax Rate Update, written by Bernadette Sablan, effective 1 July 2010, the counties of Hertford, Lee, Randolph, and Rowan enacted an additional 0.25% sales and use tax.

For further information regarding North Carolina sales and use tax rates, visit the NC DOR.

Source:

It has been reported that  Britain's tax authority will introduce reverse value-added tax (VAT) charges relating to carbon emissions trading from November 1, 2010, replacing a zero tax rate implemented last year to prevent fraud.

The zero VAT rate was put in place in July 2009 as an interim measure to halt rapidly escalating carousel fraud in spot trading of European Union carbon permits, called EUAs, HMRC said.

The new reverse charge will also apply to sales of two types of Kyoto Protocol carbon offsets called Certified Emissions Reductions (CERs) and Emissions Reduction Units (ERUs).

HMRC had been awaiting an EU-wide directive to provide a reverse charge option, which was finally adopted by member states in March.

You can access the HMRC announcement at: http://www.hmrc.gov.uk/briefs/vat/brief3510.htm

It’s that time of the month again to take a look at the sales and use tax changes happening in September.  This month there are only a few states with rate changes but we do have some Sales Tax Holidays to report.  In August we had many states participate in Back To School Sales Tax Holidays.  In September there are a few Sales Tax Holidays giving shoppers the ability to make certain purchases tax free.

Alabama
Pinson City – 2.0% sales and use (New Levy)
Creola City – 4.0% sales and use; Creola police jurisdiction – 2.0% sales and use
Douglas City – 3.0% sales tax only (effective 8/1/2010)
Elba City – 4.0% sales and use, 2.0% rental sales and use; Elba police jurisdiction – 2.0% sales and use;

Arizona
Florence City – 3.0% use tax and rental use tax only

Oklahoma
Haskell County – 1.5% sales and use

Sales Tax Holidays

Kenai Borough, Alaska
There will be an exemption for the Borough of Kenai, Alaska from sales tax on non-prepared food from 1 September 2010 to 31 May 2011. The city of Homer is participating in this holiday exemption.  This Sales Tax Holiday does not apply to all food items sold by restaurants and restaurant type sellers and all prepared foods.

Wrangell, Alaska
On 11 September 2010, the city of Wrangell, Alaska will grant sellers the opportunity to participate in a Sales Tax Holiday. The Sales Tax Holiday will exempt purchases of all tangible personal property and services, excluding rentals.

West Virginia
West Virginia is having a Sales Tax Holiday from 1 September 2010 to 30 November 2010 on non-business purchases of Qualified Energy Star Products costing $5000 or less per item. The Sales Tax Holiday does not apply to business transactions in West Virginia. For business transactions, the full respective tax rates are applicable.

Stay tuned for the upcoming October sales and use tax changes next month.  There are sure to be a lot more rate changes in October because we tend to see a high volume on the quarter months. 
 

The rules are as follows according to Canada Post:

• Most Canada Post goods and services are subject to the Federal Goods and Services Tax (GST), and to the Provincial Sales Tax (PST or QST) or to the Harmonized Sales Tax (HST), where applicable.
• Effective July 1st, 2010, Canada Post goods and services will be subject to Ontario and British Columbia HST at the rate of 13% and 12%, respectively.
• There are certain items sold by Canada Post that are not taxable such as postal Money Orders, the fee on a Money Order and the exchange on a Money Order.
• Certain Provincial governments and their entities and certain Indian Bands and Natives are exempt from paying sales taxes.
   

In the UK, government ministers have advised professional representatives that they will make online filing of VAT returns compulsory for all businesses from 1 April 2012.

According to the reporting media, people who have a conscientious objection to using a computer will be able to continue filing paper returns and the CIOT has argued that some people with disabilities that prevent them using computers should also be exempted from the rule. 

Obviously, there are a few issues to be finalized yet and I will keep you informed as the information becomes available.

Since 1980 when the VAT Law was implemented the Mexican Government has been facing a tax dilemma related to the scope of VAT. The main point of discussion has been to expand the scope of the Value Added Tax to include food and medicines.

With just a month far away from the 2011 Budget presentation, Mexico’s two biggest parties have expressed their agreement on taxing current exempt goods such as food and medicines.

In an interview with Bloomberg legislator David Penchyna from the Institutional Revolutionary Party (PRI) spoke in favor of taxing some food items by applying a low rate but keeping a basket of basic foods exempt to reduce costs for the poor.

President Felipe Calderon has September 8^th as his deadline to submit the 2011 Budget Proposal.

On 30 June 2010 when updating the information on the Romanian VAT rate in my blog I made the following statement: “I trust that other EU Member States may follow in the near future.  I have my eye on the Czech Republic.”

I admit that at the time I did not have Poland in mind.   However, I got this partially right in suggesting that other EU Member States may increase the VAT rate.    Poland's prime minister is on record as saying that his government plans to raise the value-added tax by one percentage point to 23 percent as part of efforts to tackle the country's budget deficit.   Therefore, it is highly likely that Poland will be the next EU Member State to use a hike in the indirect tax rates to battle its country’s deficit.

The European Court of Justice has found under case C 582/08 in favor of the United Kingdom in an action brought against it by the European Commission concerning the repayment of UK VAT to businesses outside the European Union. The decision will be a blow to the financial services and insurance sectors and means that the UK Government can deny claims for the repayment of UK VAT incurred by businesses established outside the European Union.

In particular this ruling is a setback for finance and insurance businesses established outside the EU that were hoping to make substantial VAT recovery.  But it can also be viewed as a favorable treatment for the EU established financial services companies trading outside of the EU.  I have a feeling this will not be the end of this issue.

To read about the case you can go to the official website of the EU Court of Justice or follow the link here:

http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=en&newform=newform&alljur=alljur&jurcdj=jurcdj&jurtpi=jurtpi&jurtfp=jurtfp&alldocrec=alldocrec&docj=docj&docor=docor&docop=docop&docav=docav&docsom=docsom&docinf=docinf&alldocnorec=alldocnorec&docnoj=docnoj&docnoor=docnoor&radtypeord=on&typeord=ALL&docnodecision=docnodecision&allcommjo=allcommjo&affint=affint&affclose=affclose&numaff=&ddatefs=01&mdatefs=04&ydatefs=2010&ddatefe=27&mdatefe=07&ydatefe=2010&nomusuel=&domaine=&mots=&resmax=100&Submit=Submit
 

The standard VAT rate in UK is currently 17.5 per cent but will be increased to 20 per cent on 4 January 2011. 
The change only applies to the standard VAT rate. There are no changes to sales that are zero-rated or reduced-rated for VAT. Similarly, there are no changes to the VAT exemptions. Any sales you make at these rates are unaffected by this change.
We  will include this change in the standard Thomson Reuters September 2010 Content release.  

For more information regarding the VAT increase in the UK you can visit HM Revenue Service link provided below: http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-increase.htm

The majority of the changes in August have to do with Back to School Sales Tax Holidays. 15 state sales tax holidays appeared in this update, including holidays in Alabama, Connecticut, Florida, Illinois, Iowa, Louisiana (including St. Charles Parish), Maryland, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and Virginia. Additionally, at the time of this publication there is one pending sales tax holiday expected to occur in Massachusetts.

Alabama

4.5% Thomasville; 1.0% Thomasville (Automotive Sales and Use Tax); 2.25% Thomasville (Manufacturing Sales and Use Tax); 2.25% Thomasville Police Jurisdiction; 0.5% Thomasville Police Jurisdiction (Automotive Sales and Use Tax); 1.125%Thomasville Police Jurisdiction (Manufacturing Sales and Use Tax); 3.0% Valley Grand; 1.5% Valley Grand Police Jurisdiction; 3.0% Valley Head; 2.0% Valley Head (Automotive and Manufacturing Sales and Use Tax); 1.5% Valley Head Police Jurisdiction; 1.0% Valley Head Police Jurisdiction (Automotive and Manufacturing Sales and Use Tax).

Sales Tax Holiday occurring from 8/6/10 – 8/8/10.

$100 or less per item on qualifying Clothing and Footwear; $750 or less per item on qualifying Computers, Computer Software, and Computer Supplies; $50 or less per item on qualifying non-business purchases of School Supplies and Textbooks; $30 or less per item on purchases of qualifying non-business purchases of Books.

Note that the exemption does not apply if goods are delivered or received outside the Sales Tax Holiday. Additionally, local authorities have the option to participate, partially participate or not participate in the Sales Tax Holiday.

Connecticut

Sales Tax Holiday occurring from 8/15/10 to 8/21/10.

$299.99 or less per item on purchases of qualifying Clothing and Footwear.

Florida

Sales Tax Holiday occurring from 8/13/10 to 8/15/10.

$50 or less per item on qualifying purchases of Clothing and Footwear; $10 or less per item on qualifying purchases of School Supplies; $50 or less per item on qualifying purchases of Books.

Note that the exemption does not apply to the sale of books, clothing or school supplies within a theme park, entertainment complex, public lodging establishment or airport.

Illinois

Sales Tax Holiday occurring from 8/6/10 to 8/15/10.

Reduced sales tax rate of 1.25% on qualifying purchases of Clothing and Footwear $99.99 or less per item; reduced sales tax rate of 1.25% on qualifying purchases of School Supplies (no limit).

Note that the reduced rate of tax applies only to school supplies used by students in the course of study. The applicable taxes for local jurisdictions are required to be collected during the Holiday period.

Iowa

Sales Tax Holiday occurring from 8/6/10 to 8/7/10.

$99.99 or less per item on qualifying purchases of Clothing and Footwear.

Louisiana

State Sales Tax Holiday and St. Charles Parish Sales Tax Holiday occurring from 8/6/10 to 8/7/10.

First $2,500 per item on qualifying non-business purchases of all Tangible Personal Property.

Note that the Sales Tax Holiday does not apply to purchases of taxable services, leases, or rentals of tangible personal property, vehicles, or food for immediate consumption.

Maryland

Sales Tax Holiday occurring from 8/8/10 to 8/14/10.

$100 or less per item on qualifying purchases of Clothing and Footwear.

Missouri

Sales Tax Holiday occurring from 8/6/10 to 8/8/10.

$100 per item on qualifying non-business purchases of Clothing and Footwear; first $3,500 per invoice on qualifying non-business purchases of Personal Computers and Computer Peripheral Devices; first $350 per invoice on qualifying non-business purchases of Computer Software; first $50 per invoice on qualifying non-business purchases of School Supplies.

Note that the exemption does not apply to the sales of books, clothing, footwear, school supplies, or computer software within the Missouri State Fair Grounds. Local authorities have the option to participate or not participate in the Sales Tax Holiday. Consumer’s Use Tax and Seller’s Use Tax are not eligible for the Sales Tax Holiday Exemption.

New Mexico

Sales Tax Holiday occurring from 8/6/10 to 8/810.

$99.99 or less per item on qualifying purchases of Clothing, Footwear, and School Supplies (Other); $1,000 or less per item on qualifying purchases of Computers; $500 or less per item on qualifying purchases of Computer Accessories; $14.99 or less per item on qualifying purchases of School Supplies.

Note that participation in the Sales Tax Holiday is optional for retailers. Backpacks for hiking and similar activities are taxable.

North Carolina

Sales Tax Holiday occurring from 8/6/10 to 8/810.

$100 or less per item on qualifying non-business purchases of Clothing, Footwear, and School Supplies; $3,500 or less per item on qualifying non-business purchases of Computers; $250 or less per item on qualifying non-business purchases of Computer Supplies; $300 or less per item on qualifying non-business purchases of School Instructional Materials; $50 or less per item on qualifying non-business purchases of Sports and Recreational Equipment.

Oklahoma

Sales Tax Holiday occurring from 8/6/10 to 8/8/10.

$99.99 or less per item on qualifying purchases of Clothing and Footwear.

South Carolina

Sales Tax Holiday occurring from 8/6/10 to 8/8/10.

No limit on qualifying non-business purchases of Clothing, Footwear, Computers, and School Supplies.

Tennessee

Sales Tax Holiday occurring from 8/6/10 to 8/8/10.

$100 or less per item on qualifying non-business purchases of Clothing, Footwear, and School Supplies; $1,500 or less per item on qualifying non-business purchases of Computers.

Texas

Sales Tax Holiday occurring from 8/20/10 to 8/22/10.

$99.99 or less per item on qualifying purchases of Clothing, Footwear, and non-business purchases of Backpacks and School Supplies.

All school supplies and backpacks for use by non-elementary and non-secondary students are taxable.

Virginia

7.0% Christiansburg (City Meals Sales Tax); 7.5% Covington (City Meals Sales Tax).

Sales Tax Holiday occurring from 8/6/10 to 8/810.

$100 or less per item on qualifying purchases of Clothing and Footwear; $20 or less per item on qualifying purchases of School Supplies.

Additional information regarding qualifying products for each state’s Sales Tax Holidays can be found at their respective Department of Revenue websites. Stay tuned for more Sales Tax Holidays occurring in September for Alaska and West Virginia.

In the Official Journal of the European Union of 22 July 2010, the text of Council Directive 2010/45/EU of 13 July 2010, on VAT invoicing rules, was published. Member States have to bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 31 December 2012. Member States shall apply those provisions from 1 January 2013.  For your convenience I am providing the web link to the published directive: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:189:0001:0008:EN:PDF

Happy readings and I will be interested in hearing your opinions.