Originally published April 2005
This article discusses international tax developments and has been prepared by professionals in the member firms of Deloitte Touche Tohmatsu.
America - free trade talks with Middle East and SE Asia On 18 March the US government announced that it will soon begin bilateral free-trade negotiations with five more members of the Association of Southeast Asian Nations, including the Philippines, Indonesia, Malaysia, Brunei and Cambodia. The US already has a Free Trade Agreement (FTA) in place with Singapore and is in the process of negotiating an FTA with Thailand. Additionally, on 12 March, the US began negotiations on an FTA with the United Arab Emirates and Oman. The latter agreements are important steps on the path to fulfilling the US’ plan to establish a Middle East Free Trade Area by 2013.
Australia - non-GST indirect taxes to be phased out Six Australian states out of the eight have agreed with the Federal Government to phase out various indirect taxes over the next 6 years in return for a share of GST revenue.
European Union – proposal to accelerate new GSP due to tsunami disaster On 22 March the EU proposed to accelerate the effective date of the new EU Generalized System of Preferences (GSP) in response to the tsunami disaster. Under this proposal, the new EU GSP would come into effect on 1 April 2005 rather than 1 July 2005 and last until 31 December 2008. The new GSP provides for duty-free and quota-free access for all goods into the EU, except arms and munitions, for the 50 poorest countries. For other GSP countries, the list of goods with reduced duty rates would increase from 6,900 to about 7,200 products, the increase consisting of products mainly from the agricultural and fishery sectors.
European Union – EU tax authorities able to pursue debtors cross-border The UK Revenue authority responsible for the collection of VAT has recently been able to claim for outstanding UK VAT by petitioning the Irish Courts for the insolvency of an Irish company owing UK VAT. The Irish court ruled that the introduction of the EC Regulations on Insolvency in 2000 gave them the right to do this, despite pre-2000 Irish cases which denied such a right. We understand that following this success, UK Revenue & Customs has made more claims against defaulting Irish companies and are likely to use the EC Regulations to make similar petitions for insolvency against debtors in other member States.
Georgia – reduction in VAT postponed The Government did not, as previously intended, reduce the standard rate of VAT from 20% to 18% with effect from the beginning of this year. Instead the reduction is now planned to take effect from 1 July 2005.
Niger – new VAT exemptions Niger introduced VAT at 19% in January 2005. However, following some protest action, the Government has decided to exempt water, electricity, flour and milk from the new tax.
Panama and Singapore – free trade agreement On 6th April 2005 Panama and Singapore concluded a free trade agreement. The agreement involves a substantial tariff reduction and is intended to expand trade relations between the two nations. The final text will be made available by the two Governments in the next few weeks.
Romania – some cultural services lose exemption. Excise rates up With effect from 1 June 2005, some cultural services (including all those liable to entertainment tax other than where the supplier is a charity or public institution) and certain media and broadcasting rights will lose VAT exemption and become standard rated. With effect from 1 April 2005, many excise duties were increased, and various exemptions on ethylic alcohol and mineral oils removed.
Swaziland – VAT introduction planned The Budget for 2005/6 reaffirmed the plan announced in the 2003/4 Budget that VAT will be introduced in 2007/8.
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