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VAT News
Unjust enrichment
Unjust enrichment can occur in circumstances where a
taxable person, who initially overpaid tax because of an
error in law, gets a windfall gain if the tax authorities
repay that tax to him. Such a windfall gain is considered
to be unjust where the burden of the overpaid tax was
not borne by the taxable person but, rather, had been
passed on to his customer. The Act sets out the method
by which a claim for repayment of overpaid VAT must be
made and the factors which will be taken into account in
determining whether or not a repayment would result in
unjust enrichment.
Penalties
With effect from 24 December 2008, the standard
penalty for a VAT compliance breach has been increased
from EUR 1, 20 to 4,000. Furthermore, the Act provides
for additional penalties of EUR ,000 to ,000 for a variety
of careless and deliberate acts or omissions.
Tea and coffee
Tea and coffee supplied in non-drinkable form are subject
to the zero rate, whereas tea and coffee supplied in
drinkable form are subject to the reduced rate of 1 . %.
From our correspondent Michael O’Connor
William Fry Tax Advisers, Dublin
Laos
Utilities, beer and fuel
Following the approval of the VAT Law by the National
Assembly in December 200 , 19 it has been reported that,
with effect from 1 January 2009, locally produced and
imported electricity, water, certain brands of beer and
fuel have become subject to VAT at the rate of 10%.
Extension of VAT
The government has reportedly reconfirmed its intention
to ultimately replace the business turnover tax by
the newly introduced VAT but, since not all companies
are ready for the VAT, it has decided to limit, for the time
being, the field of application of VAT to companies
whose investments exceed LAK billion (approximately
USD 9 ,000). Companies whose investments exceed
LAK 400 million are allowed to participate in the VAT
system on a voluntary basis after they have proved their
ability to comply with the new tax system. The government
hopes that the VAT system can be fully implemented
in the next fiscal year, i.e. in the period from 1
October 2009 to 0 September 2010.
Under the current system, final consumers must request
a receipt for every transaction that is subject to VAT. In
the absence of a receipt, the government will not be able
to trace the transaction. It is expected that the government
will encourage final consumers to participate in
the VAT system by means of a broad publicity campaign.
Latvia
Building land
On 24 February, the cabinet of ministers approved the
draft amendments to the VAT Law. The draft contains a
definition of “building land” and provides that its supply
is subject to VAT at the standard rate. In order to come
into effect, the amendments must be adopted by the parliament.
Currently, the supply of immovable property (except for
the first sale of new immovable property), including
land, is exempt from VAT. This is contrary to the VAT
Directive, to the extent the exemption is applied to building
land.
The draft defines building land as a plot of land in
respect of which a permit has been issued for construction,
engineering communications 20 or construction of a
road. Where such a permit is issued after 1 December
2010, the supply of the building land would be subject to
VAT.
Liechtenstein
Anti-fraud agreement with the European Union –
Ecofin
See under European Union.
Macedonia
Deferral of payment
A law amending the Tax Procedure Law was published in
Official Gazette No. 1 9 of 22 December 2008 and
entered into force on 1 January 2009.
The amendments reintroduce the procedure for deferral
of the payment of tax on demand of the taxpayer, if:
– there is serious doubt about the validity of the tax
assessment made by the tax administration; or
– payment of the tax liability would “endanger” the
existence of the taxpayer.
The deferral can only be approved by the revenue office,
if the payment is secured by mortgage, a security in the
form of movable property a bank guarantee, or a personal
guarantee provided by a third person. The value of
the guarantee must be at least 2 0% of the liability (previously
1 0%).
Payment of the tax due can be deferred for a specified
period of time or the tax can be paid in not more than
monthly instalments. Interest is due for the period of
deferral and is calculated as provided in the Law.
Antun Belamarik, Skopje
19. See International VAT Monitor (2007), p. 201, and International VAT
Monitor 1 (2008), p. .
20. Engineering communications is defined as a device, equipment or an
aggregate of devices and equipment intended to supply a structure (building,
construction) with raw materials, communications, energy resources and
other resources.
148 INTERNATIONAL VAT MONITOR MARCH/APRIL 2009 © IBFD