VAT Design Issue no. 23:
Registration and Registration Threshold, effective date of registration and cancellation of
registration
VAT Design Issue no. 23
Registration and Registration Threshold, effective date of registration and cancellation of
registration
I.
HIGH LEVEL CTRSG RECOMMENDATION
a) Mandatory and optional registration: see VAT Design Issue no.3 and Design Issue no.24
b) Application
i)
Mandatory registration
(1) suppliers established in the US
(a) application as soon as turnover threshold is exceeded and at the latest within one
month following that event
(b) in case of non-application where threshold is exceeded, the authorities can force a
registration at the time of they detect the non-application (which could be fraudulent
or not)
(2) suppliers not established in the US
(a) application as soon as turnover threshold is exceeded and at the latest within one
month following that event
(b) in case of non-application where threshold is exceeded, the authorities can force a
registration at the time of they detect the non-application (which could be fraudulent
or not)
ii) Optional registration:
(1) suppliers established in the US
(a) application
(i) prior to the start of the qualifying business activity with effective date as indicated
in the application form;
(ii) or at any later moment in time with effective date as indicated in the application
form;
(2) suppliers not established in the US:
(a) application
(i) prior to the start of the taxable activity in the USA with effective date as indicated
in the application form;
(ii) or at any later moment in time with effective date as indicated in the application
form;
c) Effective date of VAT registration:
i) Mandatory: registration
(1) In case of application:as soon as request for VAT registration is accepted by Tax
Administration with effective date from the date the threshold has been exceeded
(2) In case of forced registration: the effective date of registration will be the date the
conditions were met
ii) Optional registration
(1) As soon as request for VAT registration is accepted by Tax Administration with effective
date as indicated in the application form;
st
(2) Taxpayer must remain registered for at least two calendar years after the 31 December
of the calendar year in which he has been voluntary registered (voluntary registration
period).
d) Cancellation of VAT registration
i) In case of ceasing taxable activity both for mandatory and obligatory registration
ii) Obligatory (“ex officio”) cancellation of registration:
st
(1) : where threshold is not exceeded on 31 December of the year in which the voluntary
CTRSG – VAT Design Issue no. 23 – Final version - 24 March 2010
Prepared by PricewaterhouseCoopers for sign off by VAT managers
This paper has been prepared for the use of the CTRSG and may not cover all issues of interest of the CTRSG. It does not
represent a definitive opinion of PricewaterhouseCoopers.
VAT Design Issue no. 23:
Registration and Registration Threshold, effective date of registration and cancellation of
registration
registration elapsed and no application to maintain the voluntary registration has been
filed with the tax authorities of the two calendar years after the calendar year
iii) In cases of proven fraud upon specific legal procedures (to be defined – as a means of
protection for the VAT revenues and the legitimate traders – not to become jointly liable)
II. BEST PRACTICES AND REASON WHY
a) Singapore
III. OTHER OPTIONS CONSIDERED
a) Effective date of VAT registration: As soon as requested by a taxable person without approval of
the tax authorities
IV. REASONS FOR CTRSG RECOMMENDATION
a) Clarity on effective date and easy procedure
b) Low cost of compliance and certainty
V. REASONS OF REJECTION OF OTHER OPTIONS
a) Option a):. An approval of the tax authorities and effective controls when granting a VAT
registration number are necessary to avoid fraud.
VI. KEY ATTENTION POINTS
a) Linked with Design Issue no.10: Deductions
b) Linked with Design Issue no.25: Invoicing, Self-invoicing, Summary invoices, Outsourcing of
invoices and E-invoicing
c) Linked with Design Issue no.29: VAT period, VAT return
d) Linked with Design Issue no.33: VAT Grouping
VII. SOME EXAMPLES (refer to attachment)
Development to be agreed with VAT Managers
VIII.RESEARCH MATERIAL
a) EU VAT Directive (Article 213-216) (see selected research material 1)
b) VAT Law Switzerland (Article 10, 66) (see selected research material 2)
c) GST legislation New Zealand (Part 8) (see selected research material 3)
d) GST legislation Singapore (Section 9, First Schedule) (see selected research material 4)
e) GST legislation Australia (Part 2-5) (see selected research material 5)
f) Global VAT Online (see selected research material 6)
g) EUROPA, Press Releases – “VAT fraud: The European Commission proposes measures to
tackle fraud effectively”, IP/08/454, 17 March 2008:
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/454&format=HTML&aged=0&lan
guage=en&guiLanguage=en
h) EUROPA, Press Releases – “VAT fraud: The European Commission presents an action plan to
better combat VAT fraud”, IP/08/1846, 1 December 2008:
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/1846&format=HTML&aged=0&la
nguage=en&guiLanguage=en
i) VAT legislation proposed by European Commission, “On a coordinated strategy to improve the
fight against VAT fraud in the European Union” COM(2008)807, 1 December 2008. (Section
3.1.1) (see selected research material 7)
j) Goods and Services Tax Bill 2009 (Malaysia) (Part IV) (see selected research material 8)
CTRSG – VAT Design Issue no. 23 – Final version - 24 March 2010
Prepared by PricewaterhouseCoopers for sign off by VAT managers
This paper has been prepared for the use of the CTRSG and may not cover all issues of interest of the CTRSG. It does not
represent a definitive opinion of PricewaterhouseCoopers.