Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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UK VAT on Marketplace Sales: HBS Enterprises Ltd v HMRC
The UK tax tribunal case HBS Enterprises Ltd v HMRC examines VAT liability arising from marketplace sales, addressing the question of whether the marketplace or the underlying seller bears VAT accountability. HMRC disputed HBS Enterprises' VAT treatment of goods sold through online marketplace platforms, raising issues around the deemed supplier rules applicable to marketplace facilitators. The case highlights the increasingly complex VAT landscape for e-commerce operators in the UK post-Brexit, where marketplace VAT rules impose collection and remittance obligations. The ruling has significant implications for businesses selling through third-party platforms in the UK.
FBR deploys new powers to punish tax dodgers avoiding digital monitoring
Pakistan's Federal Board of Revenue (FBR) has deployed new enforcement powers targeting taxpayers who evade or circumvent digital monitoring systems. The measures aim to penalize non-compliance with FBR's digital surveillance infrastructure, which tracks business transactions and tax obligations. This reflects Pakistan's broader push to expand the tax base and improve compliance through technology-driven monitoring. The new powers likely include financial penalties and legal consequences for those found deliberately avoiding digital tracking mechanisms, signaling a firmer regulatory stance on tax evasion and strengthening enforcement capabilities within the country's tax administration framework.
VAT Audit Checklist for Ecommerce Businesses
This article provides a practical VAT audit checklist tailored for ecommerce businesses, covering key areas tax authorities examine during VAT audits. It outlines the documentation and compliance requirements ecommerce sellers must maintain, including transaction records, cross-border sales reporting, marketplace obligations, and VAT registration thresholds across jurisdictions. The checklist helps online retailers identify potential compliance gaps before an audit occurs, addressing common risk areas such as distance selling rules, digital services VAT, and proper invoice management. It serves as a preparatory guide for ecommerce businesses seeking to ensure their VAT position is defensible under scrutiny.
Customs Enforcement starts inquiry into senior officials over abuse of EFS
Pakistan's Customs Enforcement has launched a formal inquiry into senior officials suspected of abusing the Export Facilitation Scheme (EFS), a customs regime designed to allow duty-free import of inputs for export-oriented industries. The investigation focuses on alleged misuse of the scheme, potentially involving fraudulent claims or diversion of duty-exempt goods into the domestic market. Such abuses undermine customs revenue and distort trade competitiveness. The inquiry signals authorities' intent to tighten oversight of preferential customs schemes and hold accountable those exploiting regulatory frameworks meant to support legitimate exporters.
Puerto Rico Act 60 Investigations
Puerto Rico Act 60 (formerly Acts 20/22) offers significant tax incentives including a 4% corporate tax rate and 0% tax on certain passive income for eligible residents and businesses. This article examines IRS and DOJ investigations into individuals claiming these incentives, focusing on compliance requirements such as bona fide residency rules, presence tests, and source-of-income rules. Authorities are scrutinizing taxpayers who claim Act 60 benefits while maintaining substantial ties to the US mainland, leading to audits, criminal investigations, and enforcement actions targeting improper or fraudulent use of Puerto Rico's tax incentive regime.
Webinar: Navigating transfer pricing audits in Southeast Asia
PKF is hosting a webinar focused on navigating transfer pricing audits across Southeast Asia. The session is designed to help businesses understand the audit landscape, compliance requirements, and risk management strategies in the region. Southeast Asian tax authorities have been increasingly aggressive in scrutinizing intercompany transactions, making it critical for multinationals to be well-prepared. The webinar likely covers documentation standards, common audit triggers, dispute resolution mechanisms, and country-specific practices across key jurisdictions such as Indonesia, Thailand, Vietnam, Malaysia, and the Philippines.
Tripura HC Quashes CGST Order for Reopening Issues Already Examined by State GST Authorities
The Tripura High Court quashed a Central GST (CGST) order that attempted to reopen issues already examined and settled by State GST authorities. The court ruled that reopening matters previously scrutinized by state tax authorities under the GST framework constitutes an overreach and violates principles of finality in tax adjudication. The case highlights the jurisdictional boundaries between central and state GST authorities in India's dual GST structure, reinforcing that matters conclusively examined at one level cannot be arbitrarily revisited by parallel tax authorities, providing important precedent for taxpayers facing duplicate scrutiny under India's GST system.
Roadtrip through ECJ Cases – Focus on “Liability to pay VAT – VAT shall be payable by any person who enters the VAT on an invoice” (Art. 203)
This article examines European Court of Justice case law focusing on Article 203 of the EU VAT Directive, which establishes that VAT becomes payable by any person who enters VAT on an invoice, regardless of whether a taxable supply actually occurred. The ECJ roadtrip series analyzes how this liability rule operates in practice, exploring scenarios where incorrectly invoiced VAT creates obligations for the issuer. The piece highlights the strict nature of this provision and its implications for businesses issuing invoices with VAT amounts, even when the underlying transaction may not attract VAT.
Comments on T-356/25 (Rapera) – Tax Representatives’ Direct VAT Liability Confirmed; Joint Liability Requires Proportionality
This article analyzes case T-356/25 (Rapera), which confirms that tax representatives can bear direct VAT liability under certain circumstances. The ruling establishes that while direct liability for tax representatives is legally valid, the imposition of joint and several liability must respect the principle of proportionality. Courts cannot apply unlimited joint liability without considering the representative's actual role and degree of involvement. The decision has significant implications for fiscal representatives operating across EU jurisdictions, clarifying the boundaries of their exposure and reinforcing proportionality as a safeguard against disproportionate penalty burdens.
IRS Introduces Automatic Exemption from Penalty Process, Phases Out First Time Abate
The IRS is introducing an automatic penalty exemption process that will replace the existing First Time Abate (FTA) program. Under the new system, eligible taxpayers will automatically receive penalty relief without needing to request it, streamlining the abatement process. The FTA program, which allowed taxpayers with a clean compliance history to request one-time penalty relief, will be phased out as the automatic system rolls out. This change aims to reduce administrative burden on both taxpayers and the IRS while ensuring qualifying individuals and businesses receive timely penalty relief without navigating manual request procedures.
IRS Final Rules Identify Certain CRATs as ‘Listed Transactions’
The IRS has issued final rules designating certain Charitable Remainder Annuity Trusts (CRATs) as 'listed transactions,' meaning they are classified as abusive tax shelters requiring mandatory disclosure to the IRS. Transactions identified as listed must be reported by taxpayers and material advisors, with significant penalties for non-compliance. The targeted CRAT arrangements allegedly allow taxpayers to improperly avoid capital gains taxes through trust structures. By formally listing these transactions, the IRS signals heightened scrutiny and enforcement action against promoters and participants using CRATs for tax avoidance purposes beyond their legitimate charitable planning use.
Cookies Retail Led Dispensary Into $1.9M Tax Crisis, Suit Says
A cannabis dispensary has filed a lawsuit against Cookies Retail, alleging the retail brand's mismanagement led to a $1.9 million tax crisis. The suit claims operational and financial decisions made by Cookies resulted in unpaid tax liabilities that now threaten the dispensary's viability. The case highlights the complex tax compliance challenges facing cannabis businesses, which often operate in a heavily regulated environment with limited access to standard banking and accounting services, making tax obligations particularly burdensome and disputes over responsibility for tax shortfalls especially consequential.
IRS designates certain CRAT arrangements as listed transactions
The IRS has designated certain Charitable Remainder Annuity Trust (CRAT) arrangements as listed transactions, signaling heightened scrutiny of these structures. Listed transaction status requires taxpayers and material advisors to disclose their participation, with significant penalties for failure to comply. CRATs are irrevocable trusts that pay annuities to beneficiaries, with remainders passing to charity, but abusive arrangements have been used to improperly avoid taxes. This designation alerts practitioners and taxpayers to the IRS's view that specific CRAT configurations constitute tax avoidance schemes subject to disclosure requirements and potential challenge.
IRS designates certain CRAT arrangements as listed transactions
The IRS has designated certain Charitable Remainder Annuity Trust (CRAT) arrangements as listed transactions, signaling heightened scrutiny of these structures. Listed transaction status requires taxpayers and material advisors to disclose participation, with significant penalties for failure to comply. CRATs are irrevocable trusts that pay annuities to beneficiaries before transferring remaining assets to charity, but certain abusive arrangements have been used to improperly eliminate capital gains or ordinary income. This designation alerts taxpayers that the IRS views specific CRAT configurations as tax avoidance schemes, subjecting them to audit risk and potential penalties.
States Scrutinizing Aircraft Sales and Lease Transactions
State tax authorities are increasingly scrutinizing aircraft sales and lease transactions, focusing on sales and use tax compliance. These high-value transactions often involve complex structures—including sale-leaseback arrangements, interstate commerce exemptions, and fly-away exemptions—that can trigger audits. States are examining whether proper exemptions were claimed, whether aircraft are used predominantly in interstate commerce, and whether transactions are structured to avoid tax liability. Businesses and individuals involved in aircraft acquisitions should review their tax positions carefully, ensure documentation supports claimed exemptions, and proactively address potential exposure before state auditors identify discrepancies.
Okla. Tax Officials Say McGirt Can't Upend Osage Ruling
Oklahoma tax officials are contesting whether the McGirt v. Oklahoma Supreme Court ruling, which affirmed tribal sovereignty over large portions of Oklahoma, can be applied to overturn a prior tax ruling concerning the Osage Nation. Authorities argue the McGirt decision should not disturb established Osage taxation determinations, raising significant questions about the scope of tribal jurisdiction over tax matters. The dispute underscores ongoing tensions between state tax authority and Native American tribal sovereignty, with potentially broad implications for how tax obligations are assessed on tribal lands in Oklahoma.
IRS Asks 7th Circ. To Rehear $300M Hyatt Perks Tax Dispute
The IRS is petitioning the Seventh Circuit Court of Appeals for a rehearing in a $300 million tax dispute involving Hyatt hotel loyalty perks. The case centers on the tax treatment of benefits and rewards provided through Hyatt's loyalty program, with the IRS challenging a prior ruling it believes incorrectly characterized these perks for tax purposes. The outcome could have significant implications for how hotel and hospitality companies account for and report loyalty program liabilities and the associated tax treatment of customer reward benefits across the industry.
Austria's Bank VAT Break Was State Aid, EU Top Court Says
The European Union's top court has ruled that a VAT exemption granted to Austrian banks constituted illegal state aid, finding that the preferential treatment distorted competition within the EU single market. The Court of Justice determined that Austria's bank-specific VAT break conferred an unfair advantage on recipient institutions compared to other businesses subject to standard VAT rules. The ruling may require Austria to recover the unlawfully granted aid from the banks that benefited. The decision reinforces the EU's strict approach to ensuring that tax concessions do not violate state aid regulations.
4th Circ. Rebuffs Tax Attys' Request To Rethink Convictions
The Fourth Circuit Court of Appeals has rejected a request by tax attorneys to reconsider their criminal convictions. The attorneys sought a rehearing, but the appellate court declined to revisit its earlier decision upholding the convictions. This case falls within the realm of tax controversy, involving criminal prosecution of legal professionals in the tax field. The outcome reinforces the court's prior ruling and leaves the convictions intact, with potential further appellate options such as a Supreme Court petition remaining as possible next steps for the convicted attorneys.
Challenging your business rates valuation
UK government guidance on challenging business rates valuations covers the formal process for disputing rateable values assigned to non-domestic properties in England. Business rates are a property-based tax levied on occupiers of commercial premises, calculated using the rateable value set by the Valuation Office Agency. The guidance outlines the Check, Challenge, Appeal process, deadlines, and evidence requirements for ratepayers who believe their valuation is incorrect. Successful challenges can reduce tax liability, making this directly relevant to UK businesses managing their property tax obligations.
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