Compliance Services

E-invoicing momentum has been accelerating in Slovakia, despite several postponements to the start of the proposed e-invoicing mandate. Originally, the Electronic Invoicing Information System (IS) EFA test operation was scheduled for the beginning of September this year. This date has now been postponed to December 2022.  

The revised timeline for the staged implementation of the e-invoicing process is now in line with the following:  

• December 2022: the IS EFA test operation will begin. The pilot programme of e-invoicing should be available for all those who issue invoices to the Ministry of Finance of the Slovak Republic or to its organisation DataCentum. 
• April 2023: the first phase of the mandatory e-invoicing system will be launched and will be available for B2G transactions. The pilot programme of e-invoicing will extend its scope and should be available for all those who invoice the other budgetary organisations of the Ministry of Finance of the Slovak Republic. This will include the Financial Administration of the Slovak Republic. 
• January 2025: E-invoicing obligations at both B2B and B2C level are expected to commence, further to several postponements.  

The dates have not been fully finalised and are therefore potentially subject to change. Slovakia is a compliant territory for Tungsten and we are closely following e-invoicing developments in the country.  

Tungsten has closely been following the e-invoicing mandate in Poland, as we look to support our suppliers and buyers in Poland with upcoming mandate in 2024.  

The Polish government has published draft regulations relating to the upcoming e-invoicing mandate.  

The draft regulations incorporate some significant details. Below is a high-level summary of the critical points contained within the Polish draft e-invoicing regulations: 

• There is confirmation that the Polish e-invoicing mandate will commence on 1 January 2024. Tungsten will therefore work towards an implementation date of 1 January 2024 for the mandate and adapt our timeframes accordingly in line with any revised dates.  

• E-invoicing will also be is mandatory for foreign entities with fixed establishment in Poland.  
• Penalties for failure to comply with the e-invoicing mandate are outlined in the draft regulations.  
• The draft regulations include a new obligation to mark invoices circulated outside the KSeF environment with a QR code. 
• A new type of document- the ‘correcting invoice proposal’ – is expected to coincide with the start of the e-invoicing mandate and would apply when buyers request an amended invoice from a supplier. 
• A collective identifier must be applied when at least two invoices are issued to one recipient. 

• Certain VAT taxpayers subject to special procedures will be exempt from e-invoicing.  

The proposed changes outlined in the draft regulations are complex and Tungsten is currently analysing what this means for upcoming e-invoicing mandate and our plans to support it. Approval of the draft regulations is expected in the first quarter of 2023. We will review the finalised version once available.  

Tungsten has followed the anti-inflation measures deployed by the Polish government, which, as the name suggests, are a set of fiscal measures which serve as a direct response to rising inflation in Poland.  

However, the proposed measures do underline the limitations of Member States in respect of some of the fiscal measures they can implement. The European Commission, for example, while agreeing to the zero-rating of basic foods as part of the package, has blocked the zero-rating of natural gas, fuels and fertilisers. This is owing to EU Directive rules, which cite that energy must be taxed to at least 5%. 

While the basic foods rate was reduced to zero VAT early in 2022, it was initially envisaged that Poland would remove the zero VAT rate in January 2023. However, the Chancellery of the Prime Minister has confirmed on the Polish government website that the zero VAT rate on food products will continue until the middle of 2023.  

With inflation still a primary concern for many European countries, we can expect to see multiple countries initiate similar measures over the coming months.  

Federal Decree-Law No. 18 of 2022 has been issued by the UAE Ministry of Finance amending certain provisions of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (the VAT Decree-Law). The amendments will take effect on 1st January 2023.

The following are a summary of the major changes to the VAT Law:

• Registered persons who make taxable supplies are allowed to apply for an exemption from VAT registration if all their supplies are zero-rated and/or they no longer make any supplies other than zero-rated supplies. (article 15)
• Additional zero-rated goods and services have been added, e.g healthcare related goods and services, importation of gas, etc. (article 45)
• Tax Credit Notes must be issued within 14 days from the date of issuing tax invoices. (article 62)

Aside from these amendments, business in the UAE will be subject to a 9% Corporate Tax from 1 June 2023, this will align UAE with other Gulf Cooperation Council states.

As stated in the 2023 Pre-Budget statement, the Malaysian Ministry of Finance confirmed to implement e-invoicing as a means of increasing tax revenues and enhancing tax administration.

Recently, the Malaysian Digital Economy Corporation (MDEC) and Malaysian Inland Revenue Board (HASiL) signed a Memorandum of Understanding (MoU) as a sign of strategic collaboration for the implementation of the National eInvoice Initiative.

The National e-Invoicing Initiative will adopt the PEPPOL framework as its e-invoicing structure. It is anticipated that a “Continuous Transaction Control (CTC)” model will also be introduced following e-invoicing adoption to enable real-time tax control. A tentative timeline has been set for Q3 2023, but this is yet to be confirmed.

We have seen many developments since China launched its fully digitized e-fapiao in November 2021. Recently, Sichuan (province) and Xiamen(city) have joined the programme as issuers of fully digitized e-fapiao. This means selected pilot taxpayers in these two regions are now capable of issuing fully digitized e-fapiao to all taxpayers in China.

In light of these changes, we wanted to provide an overview of how the fully digitized process operates to date:

Issuer of sales invoices:  In Guangdong (exc Shenzhen), Shanghai, Sichuan, Xiamen, Inner Mongolia, pilot taxpayers in these regions should issue fully digitized e-fapiao via the government portal, which provides taxpayers with access to 24-hour online services to issue, deliver, and verify their fully  digitalized e-fapiao free of charge.

Receiver of purchase invoices: all taxpayers in China can accept the fully digitized e-fapiao issued from pilot taxpayers.

Fully digitized e-fapiao is one of the key projects being undertaken to reform China’s Golden Tax System. For a more in-depth understanding of how this project operates, you may refer to our previous blog on fully digitized e-fapiao.

We previously communicated about the temporary reduction of the standard VAT rate in Vietnam from 10% to 8%, effective from 1 February 2022 to 31 December 2022.

According to Decree 15/2022, the standard VAT rate will be reinstated back to 10% from 1 January 2023.

The Philippines House of Representatives is proposing to introduce VAT on non-resident companies’ supplies of electronic services in an effort to reduce unfair competition between non-resident and resident companies.

Currently, foreign businesses that provide digital services to consumers in the Philippines are not subject to VAT. The House of Representatives propose to apply VAT at 12% to a wide range of electronic services, including streaming games, music, apps, films, e-books, and e-journals.

Malaysian Sales Tax Bill 2022, which imposes sales tax on low value goods (RM500) sold online and imported into Malaysia was passed and scheduled to come into effect in January 2023.

However, the Royal Malaysian Customs Department has announced that the implementation date of the sales tax for low-value goods will be postponed by three months, to 1 April 2023.

ZATCA has extended the “Cancellation of Fines and Exemption of Penalties Initiative” for an additional six months beginning on December 1, 2022 and ending on May 31, 2023.

ZATCA has also clarified that the fines covered by the exemption decision, include fines for late registration in all tax systems, late payment, late filing of returns fines in all tax systems, fines to correct VAT returns, as well as fines for violations of VAT field control related to applying the e-invoicing regulations and other general regulations.  Note this is a general amnesty and should not be interpreted as a delay in having to comply with the requirements of the Integration Phase of the e-invoicing mandate.

A simplified guideline (Arabic) published on ZATCA’s website provides more information about the initiative (including examples of violations and the conditions for benefitting from the exemption from fines).