Type: Trend
UK’s HMRC has published a request for information (RFI) to gather opinions on the general specifications and planned procurement procedure for the creation of a proof-of-concept for the real-time extraction of VAT from payments. The goal would be to enable payment service providers to separate the VAT component of consumer payments made mainly to non-resident sellers or to facilitate marketplaces for goods.
This occurs before the anticipated launch of the tender in January 2023.
At the beginning of this year, the UK government reaffirmed its commitment to investigating the possibility of payment service providers splitting VAT on online purchases made by UK customers from non-resident vendors. This was stated in the Treasury Command Paper on maintaining and administering taxes. There are still many issues to be resolved, such as how credit card acquirers will be able to process refunds and appropriately identify the appropriate VAT amount. Additionally, since merchants might migrate to overseas providers in response to such a unilateral measure, it could affect how competitive the UK payments market is.
Effective date: N/A