VAT and regulatory round up: 7 May 2015

What’s happening in the world of VAT? Our Global Managing Editor gives her daily round-up.

UK

A new VAT fuel scale charge is applicable for May accounting periods onwards. The UK HMRC’s VAT fuel scale charges should be used by any SME business that supplies free fuel to its company car drivers and then recovers the VAT on the fuel. The scale charges are then applied so HMRC can recover the private VAT element of the fuel. They are based on CO2 emissions, banded in 5g/km steps from 120g/km or less to 225g/km or more, and can be accounted for in monthly, quarterly or annual periods.

Ukraine

A law signed by President Petro Proshenko last month exempts some drugs and medical products from taxation. The amendments to the Tax Code approved by the law foresee temporary exemption of VAT for transactions on imports of registered drugs and medical products to the customs territory of Ukraine and their first supply, provided the imported items are on the approved list. Source

Ireland

The special VAT rate for the hotel sector is unlikely to change in October’s Budget, Irish Finance Minister Michael Noonan told a Kilkenny radio station. The special rate of 9% was meant to be a temporary measure but has proved popular with the sector, and has helped create more than 30,000 jobs while costing the state a fraction of what was feared in lost tax revenue. Source

California (US)

The resort city of La Quinta has called for citizen volunteers to sit on a finance advisory committee to explore revenue-raising options for the city, including a possible sales tax hike. It will make its recommendations to the City Council in January. Some see a 1% sales tax hike from the current 8% as a way to pay for needed infrastructure improvements. Source

EU

The EU executive will propose cutting sales tax on online newspapers in a move that would bring those prices in line with print media, said EC President Jean-Claude Juncker while addressing Germany’s newspaper publishes federation BDZV in Brussels.  The EC will put forward draft legislation in the first half of 2016 to extend governments’ right to set reduced rates of VAT on newspapers to their digital versions. Source

India

The GST bill passing the lower house of the Indian parliament yesterday was greeted as good news by the IMF. The Fund said a GST will lead to long-term sustainable growth in India. But it remains a very important question as how to implement at the state levels and coordinate, said IMF's Director for Asia and Pacific Department Changyong Rhee said. Source. Experts and industry bodies believe the GST will boost growth by 1.5%. Source.   

Kenya

The National Transport and Safety Authority (NTSA) for Kenya has threatened the newly-formed umbrella body for assemblers of motorcycles, the MAAK, with a push for higher taxation of motorcycles if they don’t help to curb accidents. Firms currently pay 10% duty on imports of completely knocked down (CKD) parts which are used to assemble motorcycles locally. Imports of fully-built motorcycles are taxed at a rate 25%, giving local assemblers a significant competitive edge in terms of pricing. An additional 16% VAT is levied on all motorcycles, but local assemblers have a significant competitive edge. 

The lower taxation of CKD parts has seen the industry experience a steady growth in the registration of motorcycles from 16,293 in 2007 to 140,216 in 2011. But motorcyclists have over the past five years recorded a growing number of fatalities and were named the third largest killer on the roads by the 2015 Economic Survey. These deaths were attributed to a poor motorcycle riding culture by players in the country. Source

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