The VAT Notebook
Germany to Increase MWST Rate January 1, 2007
Beginning January 1, 2007, Germany will increase the standard MWST rate from 16% to 19%. Historically, Germany has had one of the lower VAT rates in the European Union. It now joins other EU member countries with nearly one-fifth of the expense for goods and services purchased in Germany representing tax. Most companies are eligible for a refund of the 19% MWST assessed by submitting a refund claim. For additional information on which company expenses are eligible, please contact a TTM representative.
Canada Reduces GST Rate
In contrast, The Canadian Revenue Agency reduced its GST rate from 7½% to 6½%, effective July 1, 2006. Visitors to Canada are eligible for a refund of the GST and/or HST charged on accomodation by submitting a refund claim within one year of the date of the invoice. Companies that incur GST for international trade shows may be eligible for a refund of the GST on show expenses and accomodation.
British Tax Office Begins Strict Enforcement of VAT Claim Rules
The British HMRC, Overseas Repayment Unit in Londonderry, Northern Ireland, will initiate an effort to reduce its overwhelming workload by strictly enforcing its claims submission rules. Beginning January 1, 2006, all VAT refund claims must be received complete with all required documentation and original invoices within the claim deadline. In the past, many claimants would attempt to extend the claim submission deadline by submitting incomplete claims (missing signatures, tax certifications or original invoices). Now, any claims that are incomplete will be returned to the claimant or agent immediately, without review.
American IRS office in Philadelphia Charges $35 for Tax Status Certifications
Companies interested in submitting VAT refund claims to foreign governments will now incur an additional cost. As of November 1, 2006, the Philadelphia Certifications office of the Internal Revenue Service requires a fee of $35 to process requests for tax status certifications (IRS form 6166). In addition, companies need to plan far in advance of a VAT claim deadline to obtain these forms, because the IRS is currently taking 7-8 weeks to process the requests. To request IRS Form 6166, which is required for most VAT refund claims, companies must mail (faxes are no longer accepted) a completed IRS form 8802 to the Philadelphia office, along with the $35 fee (for 1-20 copies of the certification).
