Tax Talk
Global Developments

Indirect Tax

Spain introduces stricter VAT rules for energy products from 2025

Excerpts from various sources

Starting 1 January 2025, Spain has introduced new VAT rules to prevent fraud in energy products trading. The last trader or warehouse operator owning the goods will be responsible for VAT upon removal from a tax warehouse. A guarantee covering 110% of VAT from the last two months’ sales must be provided unless exemptions apply, and tax authorities can enforce the same if VAT is unpaid for three months, post-removal.

Tax warehouse operators may share the liability for unauthorized removals. Monthly VAT returns and reporting to the Immediate Supply of Information System are mandatory.

EU to implement mandatory e-invoicing for cross-border transactions by 2030

[Excerpts from various sources]

The 27 EU member states have agreed to implement mandatory e-invoicing for cross-border transactions starting 1 July 2030. Businesses will be required to issue e-invoices for intra-community supplies of goods, EU services under the reverse charge mechanism, and intra-EU transfers of their own goods.

Member states will have a transition period to adapt their domestic digital reporting systems. The European Commission has emphasized that beyond regulatory control, e-invoicing aims to simplify VAT compliance, reduce administrative burdens, and enhance business efficiency and customer service.

New VAT rate changes in Finland from January 2025

Excerpts from various sources

Starting from 1 January 2025, the VAT rate has been hiked from 10% to 14% in respect of several goods and services including books, medicines, passenger transport, pharmaceuticals, hotel accommodation services, physical exercise services, and certain entry fees. On the other hand, tampons and nappies will see a reduction from 24% to 14%.

Further, from 1 June 2025, the sale of confectionery and chocolate will be shifted from the reduced VAT rate of 14% to the new standard rate of 25.5%.

Transfer Pricing

UAE transfer pricing disclosure

The Ministry of Finance has announced amendments to the existing Ministerial Decision No.125 of 2023 on tax groups for the purpose of Federal Decree-Law No. 47 of 2022 (UAE CT law) through the issuance of an updated Ministerial Decision No. 301 of 2024 (new decision). Disclosure as required under Article 8 of the UAE CT Law has now been aligned with the relevant provisions and decisions issued under transfer pricing regulations instead of the ‘notice or a decision issued by the Authority’. The new decision is effective for tax periods commencing from 1 January 2025.

A brief of the key amendments published in the tax alert published earlier can be found in the link – Click Here.

Malaysia introduces new transfer pricing guidelines and transfer pricing audit framework.

On 24 December 24 2024, the Inland Revenue Board of Malaysia introduced the TP Guidelines 2024⁸ and the Transfer Pricing Audit Framework (TPTAF) 2024 which provides new details and clarifications to the transfer pricing audit process.

1. Exemptions have been defined such as:
• Individuals not carrying on a business,
• Individuals carrying on a business that only engages in domestic controlled transactions,
• Entities with controlled transactions totalling to not more than RM1 million annually.
2. Scope to prepare full Contemporaneous Transfer Pricing Documentation (CTPD) amended to include - Entities with gross business income exceeding RM30 million and engaging in cross-border controlled transactions of RM10 million or more annually or receiving/providing controlled financial assistance exceeding RM50 million annually. The Full CTPD must be prepared before the due date for furnishing a tax return for the year in which a controlled transaction occurs.
3. Entities that fall below these thresholds are eligible to prepare a minimum CTPD as per 11.12 of the guidelines (which include Group Structure, Organization Structure, key controlled transactions that constitute 20% or more of the operating revenue and pricing policy). There is no explicit requirement to prepare a comparability analysis under the minimum CTPD which may be required upon request.
4. However, even exempted taxpayers are required to comply with the arm’s length principle and maintain documentation in support of the arm’s length nature of related party transactions.
5. The comparability analysis has reinforced the IRB’s preference for local comparables and local taxpayers as tested parties. However, ‘sufficient and verifiable’ information on both taxpayer and comparables is essential.
6. A tighter arm's length range is adopted, with acceptable figures falling between the 37.5th to the 62.5th percentile of the data set
7. Others: expanded guidelines align with OECD Transfer Pricing Guidelines, emphasizing the application of the arm's length principle in business restructuring, introduction of a simplified approach for low-value-adding intragroup services, allowing a 5% mark-up on relevant costs incurred. Further, stringent penalties for non-compliance with the TP Guidelines 2024 range from RM20,000 to RM100,000 per year, in addition to applicable surcharges of up to 5% on any transfer pricing adjustment made.

Taxpayers are advised to review their existing transfer pricing documentation and practices to ensure alignment with the new guidelines and audit framework.