The Resource VAT systems in third countries - harmonization efforts in Georgia and Bosnia and Herzegovina = Mehrwertsteuersysteme in Drittstaaten - Harmonisierungsbestrebungen in Georgien und Bosnien-Herzegowina

VAT systems in third countries - harmonization efforts in Georgia and Bosnia and Herzegovina = Mehrwertsteuersysteme in Drittstaaten - Harmonisierungsbestrebungen in Georgien und Bosnien-Herzegowina

Label
VAT systems in third countries - harmonization efforts in Georgia and Bosnia and Herzegovina = Mehrwertsteuersysteme in Drittstaaten - Harmonisierungsbestrebungen in Georgien und Bosnien-Herzegowina
Title
VAT systems in third countries - harmonization efforts in Georgia and Bosnia and Herzegovina = Mehrwertsteuersysteme in Drittstaaten - Harmonisierungsbestrebungen in Georgien und Bosnien-Herzegowina
Creator
Subject
Language
eng
Summary
In this article, the main discrepancies between EU and non-EU legislation as well as practical challenges for harmonization and implementation of the EU approach by non-EU states are discussed. The actual VAT systems of non-EU countries are mostly designed for a more or less closed market. This is why it is sometimes hard to align these systems to the EU VAT principles, e.g. the registration for foreign taxable persons is only possible if they find a local person liable for tax. In principle, according to Art 204 of the VAT Directive, the application of this condition is possible, but it also creates high administrative costs which prove a hindrance to modern business and competition, as well as compliance. Therefore, it is not recommended to burden foreign businesses with this obligation. Also, VAT registration is mostly possible only if a certain threshold is achieved. For this reason (e.g. in the field of increasing B2C supplies) cross-border electronic services (apps etc.) remain mostly untaxed. Third countries should, therefore, release taxpayers from registration formalities in order to gain additional revenue. In third countries the principles of VAT neutrality and proportionality are not as highly developed, either. This lack can result in VAT becoming a cost factor for business; thus, the character of a consumption tax cannot be achieved. In most cases, non-compliance with formalities is the reason for a refusal of VAT deduction - which is not in line with ECJ case law. Therefore, third countries should come to see VAT more as a consumption tax which should be neutral within the business chain. Sanctions for non-compliance should not exceed the necessary volume appropriate to achieve that aim, and should be seen separately from VAT treatment of business. Third countries are mostly lacking a functional VAT refund system for non-established taxable persons. This is a great impediment to their own enterprises in making business and claiming VAT refunds in other countries with VAT refund systems (because of reciprocity). The implementation is often also a budgetary problem, but is necessary for attracting foreign investments. At the same time, the lack of theoretical and practical expertise in EU VAT legislation, as well as insufficient control mechanisms as regards taxpayers' compliance in case of implementation of particular provisions are the main impediments for harmonization and practical implementation of EU approaches in third countries
Citation source
In: Steuer und Wirtschaft International. - Wien. - Vol. 26 (2016), no. 8 ; p. 409-415
http://library.link/vocab/creatorName
  • Berger, W
  • Kinkladze, D
Geographic coverage
  • Asia
  • Europe
Language note
English
http://library.link/vocab/subjectName
  • VAT system
  • harmonization of tax
  • third countries (EU)
  • economic activity
  • supply (VAT)
  • VAT exemption
  • VAT invoices
Label
VAT systems in third countries - harmonization efforts in Georgia and Bosnia and Herzegovina = Mehrwertsteuersysteme in Drittstaaten - Harmonisierungsbestrebungen in Georgien und Bosnien-Herzegowina
Instantiates
Publication
Label
VAT systems in third countries - harmonization efforts in Georgia and Bosnia and Herzegovina = Mehrwertsteuersysteme in Drittstaaten - Harmonisierungsbestrebungen in Georgien und Bosnien-Herzegowina
Publication

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