UK government loses ‘carousel’ VAT ruling
UK government loses ‘carousel’ VAT ruling
The UK government on Thursday faced the prospect of claims for refunds of value added tax and compensation running into hundreds of millions of pounds after the European Court of Justice declared the approach used by HM Revenue & Customs to combat so-called “carousel fraud” was illegal.
The decision highlights the escalating problems associated with this type of scam which have become a serious headache for tax authorities across Europe in recent years.
Austria, holder of the rotating EU presidency, has promised to make the battle against VAT fraud one of the cornerstones of its six-month tenure.
It said its own approach – which involves levying VAT only when a product reaches the consumer and not when it passes from trader to trader – could serve as a blueprint for other member states.
On Thursday, in a long-awaited final ruling in two UK-based test cases, Europe’s top court said companies that were unwittingly involved in a chain of transactions where carousel fraud occurred at one stage, should still have the right to reclaim value added tax in respect of their own supply deals.
More: news.ft.com
IJMA demands exemption from VAT
IJMA demands exemption from VAT
Blaming the government for imposing an eight per cent Value Added Tax (VAT) on imitation jewellery in Maharashtra, the Imitation Jewellery Manufacturers’ Association (IJMA) has demanded that they should be exempted from the levy.
Addressing the reporters here last night, IJMA president Narendra Soni said that in the absence of VAT regime in the neighbouring states like Gujarat and Rajasthan, many jewellery-makers were shifting the base there.
He said a new state-of-the-art complex called Imitation Jewellery Makers International Marketing Acrade, under the banner of the Association, will be inaugurated on January 16 at Raheja Metroplex in suburban Malad.
Mr Soni said the complex, built at a cost of Rs 45 crore, will have 427 exotic showrooms besides a variety of amenities such as conference hall, well equipped communication centre, cafetaria and fitness centre.
Soure: newkerala.com
Finance dept rejects varied VAT cap rates
Finance dept rejects varied VAT cap rates
THE Department of Finance has rejected a proposal from the business community to set different limits for input value-added tax (VAT) credits for various industries, citing that varying the rate could lead to abuse and tax leaks, a department official said.
The VAT law that expanded the tax coverage effective last November allows taxpayers to claim input VAT credits of up to the equivalent of 70 percent of their output VAT.
Some business leaders had lobbied for a VAT cap of over 70 percent, saying the existing rate was anti-growth. They said VAT caps rate should not be uniform but based on industries’ ability to generate profits.
“It is difficult to have different rates because some businesses may … make it appear that they are covered by a rate more favorable for them,” Finance Undersecretary Gil Beltran said.
Input VAT is the amount of VAT that a company shoulders every time it purchases goods or services at prices that include the 10 percent VAT. Input VAT is deductible from the tax liability, or output VAT.
More: money.inq7.net
VAT damages to states may be clipped
VAT damages to states may be clipped
Compensation to states for losses under value-added tax for 2006-07 can be pegged marginally lower at around Rs 4,000 crore.
The lower compensation is because the outgo on account of compensation to states and Union Territories in 2005-06 is now expected to be lower at around Rs 3,000 crore against a provision of Rs 5,100 crore for 2005-06.
Also, from the next fiscal, compensation to states will be only for 75 per cent of the losses incurred against 100 per cent compensation this year. Barring Uttar Pradesh, Tamil Nadu, Madhya Pradesh, Gujarat, Rajasthan, Chhattisgarh and Jharkhand, all other states have imposed the VAT.
For phasing out the 4 per cent central sales tax — the process to start in the next fiscal — the finance ministry is awaiting final recommendations from the state empowered committee set up to look into the issue of compensation.
A proposal for 100 per cent cash compensation mooted by the committee has not found favour with the finance ministry. The issue is expected to be taken up by the committee at its next meeting on January 30.
More: business-standard.com
1/12/2006
BNI plans Rp 2t in fresh loans to textile firms
BNI plans Rp 2t in fresh loans to textile firms
While acknowledging that lending to the textile industry carries a high risk, state lender Bank Negara Indonesia (BNI) will increase its loans to the sector this year.
“We estimate that loans to textile companies will increase by Rp 2 trillion (US$211 million) over the 2005 (level),” BNI president director Sigit Pramono said after a meeting with Minister of Industry Fahmi Idris on Wednesday.
Fahmi also met with Bank Indonesia Governor Burhanuddin Abdullah and several officials from local banks to discuss possible financial support for the ailing textile industry.
The industry ministry reported that textile companies were in dire need of financial support to replace aging machinery.
More: thejakartapost.com
ndonesia to scrap 10 pct VAT on foreign liners
ndonesia to scrap 10 pct VAT on foreign liners
The Indonesian government plans to scrap a 10 percent value added tax (VAT) currently imposed on foreign liners in its efforts to reduce the high-cost of doing business in the country, reports said Wednesday.
The plan comes following an earlier decision to lower freight handling fees at ship ports, said The Jakarta Post newspaper.
The decision was taken by an inter-departmental team as a reciprocal measure in line with global trade practices, as no other country in the world imposed such shipment duties.
Shipping associations have long complained about the duties as well, arguing that it only burdened overseas shipments with unnecessary costs.
“The finance, trade and transportation ministries have agreed to scrap the 10 percent value added tax (VAT) currently charged on all export and import shipping services by foreign liners,” Minister of Transportation Hatta Radjasa was quoted as saying.
“We are currently revising it, and will soon announce its implementation,” he said.
The decision was also expected to support the government’s earlier efforts in reducing high-cost economy components in the transportation sector, by lowering last year the terminal handling charge (THC) for 20-foot containers at all domestic ports from 150 U.S. dollars to 95 dollars, in comparison with other ports in the region.
Hatta explained that last year saw a 10.7 percent increase in Indonesian vessels used for domestic cargo delivery, to 6,689 vessels from 6,041 previously.
More: vat-experts.info
Taxation experts demystify VAT
Taxation experts demystify VAT
VAT is a must to make Indian industry and trade competitive both at the domestic and global level, said experts from UT Chandigarh’s Taxation Department and the PHD Chamber of Commerce and Industry (PHDCCI) at a workshop on Chandigarh VAT held on Tuesday.
UT Deputy Commissioner and Commissioner of Excise and Taxation, R.K. Rao, said the objective of VAT is to simplify the tax system on global lines and to save the tax payees from the existing pattern of tax, which is not only cumbersome and complicated, but also open to legal lacunae.
The workshop, a part of PHDCCI’s ongoing campaign towards VAT awareness and organised jointly by the UT Administration and PHDCCI at Punjab Bhavan, was inaugurated by Rao.
In a critical analysis of VAT, noted tax consultant and advocate Balbir Singh said the new tax regime is a modified phase of MODVAT and CENVAT and that VAT would help simplify the indirect tax system, reduce tax evasion, bring transparency and enhance tax neutrality, which are the reasons for the growing popularity of this multi-point sales tax.
More: cities.expressindia.com
FBT to stay, BJP ruled states to implement VAT from April one
FBT to stay, BJP ruled states to implement VAT from April one
Finance Minister P Chidambaram today gave a distinct message that the Fringe Benefit Tax (FBT) was here to stay even though the government will carry out further simplifications in Budget 2006-07 and dispelled the notion that the reform process was on hold with disinvestment of non-navratna PSUs being on track.
Mr Chidambaram said the six BJP-ruled states which had not implemented VAT, would come on board on April 1, 2006, alluding to the fact that the new system of taxtaion was a success story with revenues having been shored up in states which had shifted to the new levy.
In a wide-ranging interactive session with the Forum of Financial Writers here, Mr Chidambaram said the government was all set to achieve the Budget target for fiscal and revenue deficits.
While admitting that the reform process has been slow,Mr Chidambaram outlined steps the government has taken to put the economy on a high growth trajectory. There was sufficient evidence to prove this – the high level of investment approvals, the booming stock markets, the 30 per cent increase in non-food credit and the commendable ratings given by independent rating agencies.
More: newkerala.com
Germany’s Steinbrueck Says Faster Growth May Counter VAT Rise
Germany’s Steinbrueck Says Faster Growth May Counter VAT Rise
German Finance Minister Peer Steinbrueck defended the government’s plan to raise value-added tax in 2007, saying faster economic growth this year may counter the negative effects of the increase on consumer spending.
Chancellor Angela Merkel said yesterday her government’s plan to spend 25 billion euros ($30 billion) through 2009 to spur investment in construction and fund tax breaks for small companies will prepare Europe’s largest economy for an increase in the main VAT rate by 3 percentage points to 19 percent.
“I know'’ that raising VAT “could be counterproductive for growth,'’ Steinbrueck, 59, said in an interview late yesterday in Frankfurt. “But on the other hand, revenues will change and other things can compensate for it. I’d appreciate if everyone could see the whole picture.'’
Steinbrueck’s comments indicate a softening of his opposition to the VAT increase. In a meeting Dec. 6 with fellow European Union finance ministers in Brussels, he said “it’s well known that I’m not a supporter'’ of the plan.
More: bloomberg.com
1/11/2006
FIRS loses N146m VAT to syndicate
FIRS loses N146m VAT to syndicate
A syndicate has duped the Federal Inland Revenue Service (FIRS) of over N146 million by forging documents to divert cheques for Value Added Tax (VAT).
Two of the suspects, who are former employees of the FIRS, Ibrahim Abdullasis and Rotimi Adedibu, are in police custody for allegedly being the brains behind the scam.
The amount was deducted from several organisations and contractors.
Police sources disclosed in Abuja that some banks connived with the syndicate to perpetrate the fraud.
The gang had links at the Yaba College of Technology, Lagos, the sources said, posed as officials of the FIRS and collected VAT cheques.
It was also connected with another syndicate which operates from the Tin Can Island and Apapa Ports, known to the banks.
The cheques are diverted with the collusion of officials of the banks, among them, National, Global, Omega and Access.
Detectives recovered N34 million from Global Bank, N30 million (Access) and N16 million (Omega). About N69 million is with National Bank, yet to be paid to the FIRS.
Besides, VAT belonging to Lagos State Government, Nigerian Telecommunications Limited (NITEL) which was diverted through National Bank is yet to be paid back.
A police officer, Ama Alfred Olusegun, attached to Federal Capital Territory (FCT) Police Command Mechanised Salary Section, said to be a member of the syndicate, has been arrested.
More: independentng.com
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