Archive for May, 2015

Oracle Fusion Tax – The Good – The Bad – the Ugly

I consider myself one of the leading Oracle R12 eBTax experts around, as it does not matter what module you need tax to be driven from, what country you are rolling out to or how fast you need the solution, there is no one that can touch eBiz Answers and our team for R12 eBTax. We recognized that tax is tax and as such, we brought you a third party tax solution without the need for a third party product with our ‘eBTax Rapid Install™‘ tool that all but eliminated the most time consuming part of eBTax which is the configuration. It took us a long time to develop the eBTax Rapid Install™ and you can imagine our apprehension when we found out several years ago that Fusion Tax comes with inbuilt spreadsheet loaders but as a huge supporter of the eBTax product, it also made a lot of sense and was excited about converting our solution to be loaded via the spreadsheet loaders. Whilst I heard rumors that the loaders were not what they were cracked up to be it was not until i had to start using these spreadsheet loaders that I too side with those that think they are far form perfect and in fact, for eBTax, I would go as far as saying they didn’t work properly right up until release 11. The take more time to figure out and can only load a fraction of the information that you actually need with some frustrating bugs that don’t always do what you think is meant to happen!

So, the good, the bad the ugly, my first thoughts on the Oracle Fusion tax solution.

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Greece plan flat 18% VAT rate

News coming out of the EU suggests that Greece is planning on implementing a flat VAT rate of 18% and also reduction in their list of exemptions. Greece currently has one standard VAT rate of 23% and two reduced rates of 13% and 6.5%, these would be combined so there is only one rate of 18% meaning that the standard rate will fall by 5% but the reduced rates will see a significant rise. Medicines would be the only exemption, although tourism VAT rate is also expected to stay at 13%. The special status granted to Aegean islands, with a 30% discount on VAT rates, will be abolished.

This is part of the Greeks government’s negotiations with creditors to start reducing their high levels of national debt, and increase revenues. Nothing has as yet been approved and the rate would not be implemented till late 2015 at the earliest.

Guernsey rejects GST proposal

The possible introduction of GST was proposed in the Personal Tax, Pensions, and Benefits Review. The measure has met with strong local opposition, especially from the retail sector, as the lack of a value-added tax is seen as a key appeal to tourists.

Guernsey’s Parliament has rejected a proposal to introduce a 5% GST rate into Guernsey, which means it will not be following in Jerseys, the other large island forming part of British Crown dependency, footsteps as it introduced GST in 2012. The council ruled out the sales tax by 28 votes to 18, with many believing that GST is not suitable for the Island and its economy despite a predicted £50m revenue generation. However it is yet to be ruled out for the future with many minsters believing the debate will make a comeback.

Austrian budget announces increased reduced rate

Austrian budget announces increased reduced rate

Austria has announced that it will increase its reduced rate of 10% to 13%. Most goods and services – including livestock, seeds, cultural services, museums, zoos and hotels – will see the rate go up to 13%, from the current 10%. However Pharmaceuticals and food will still be subject to the 10% rate, essentially meaning that they will have two reduced rates.

The changes will take effect from 1 January 2016; VAT on hotel accommodation will increase from either 1 April or 1 May 2016.

The change was announced in Austria’s 2016 budget, precise details of the Budget measures are not yet known, it is expected that certain anti-fraud measures will also be introduced; mandatory electronic cash registers for small businesses, as well as other unspecified measures to combat VAT fraud in general and specifically in the case of distance sales.

South Africa potential VAT rise

South Africa is continuing to struggle with its budget deficit, this means it is facing a potential credit downgrade, meaning a rise in South Africa’s borrowing costs, leading to calls for a 2% increase in VAT rate from its current 14% to 16%, a one-percentage point increase in VAT could contribute in excess of R16 billion to government revenue annually.

The VAT rate has not increased since 1993, when it saw a 2% increase, which means its tax rate is lower than the average for Africa with the average standard rate of VAT across 28 African countries is 16.2%, while in the European Union it’s 21.5%. Meaning the increase would bring it in line with the African average. This non movement in VAT rates could be one of the reasons that ministers have failed to close the national deficit and have in fact even seen an increase in recent years.

On the other hand as South Africa impose their VAT on all but basic food stuffs many experts have questioned the impact on the poor, meaning they could also look at introducing a reduced rate, as they currently only have a standard and zero percent rates, to impose on more food stuffs.

Italy reduces Blacklist countries

Any Italian VAT registered business, resident and non-resident, must produce a regular report on transactions undertaken with a business resident in a Blacklist country, with increased restrictions on the deductibility of costs incurred from the countries. Italy have now removed several countries from its ‘Black list’ of countries that require this additional reporting.

Malaysia, Singapore and the Philippines have now been removed from this ‘Black list’ or ‘Modello Polivalente’, still leaving over 40 countries on it.

For a full list of countries see the earlier eBiz Answers post: Italian Tax Black List

Italy VAT rise looking unlikely

Italy VAT rise looking unlikely

Having already increased the VAT rate to 22% in 2013 Italy was facing another VAT increase to 24% in 2016, with an even further potential increase to 26.5% in 2018. This increase was proposed as the Italian total debt has continued to rise in recent years, and was looking to rise to 130% of GDP in 2015. Italy failed to reduce spending enough so as to reduce its deficit as a percentage of GDP to below 3%, which is a basic requirement for membership of the Euro currency. Continue Reading