November 2007

VAT TREATMENT OF BUSINESS

PROMOTIONAL ACTIVITIES

The VAT treatment of business promotional schemes offered by the retail and leisure industries is a complex area, with different rules applying to different types of arrangement.

Two recent Court of Appeal decisions have clarified certain issues and may provide some opportunities for VAT savings. Claims for past underclaimed input tax may also be possible.

We have prepared an article that analyzes the recent decisions in two cases:

  • The Loyalty Management UK Ltd case. This concerned the nectar card plan and the issue of whether VAT on the fee paid by Loyalty Management (which operated the plan) to suppliers who were providing the goods or services in return for nectar points was recoverable; and
  • The Total UK Limited case, which concerned the VAT treatment of gift vouchers issued to customers by Total UK Limited under a promotion arrangement and whether the cost of those vouchers could be deducted from the value of the fuel supply made by Total to those customers.

Please read the article here.

RUSSIA’S NEW TAX RULES

FOR HIGH-TECH COMPANIES

Russia’s President Vladimir Putin has signed Federal Law No. 195 FZ, aimed at supporting companies carrying out innovative activities.

The Law introduces a favorable tax regime for high-tech companies as well as companies engaging in any other R&D activities. Signed in July, the Law takes effect starting 1 January 2008. It introduces amendments to the VAT, profits tax, and unified tax payable under a simplified system of taxation rules.

For our readers, we have prepared a brief article about these changes to the tax regime. Please read it here.