Nexia Annual Conference Barcelona - October 2014 Special Interest Group Nexia Indirect Taxes John Voyez Smith & Williamson 44 (0)20 7131 4285 john.voyez@smith.williamson.co.uk

Introduction This is not a technical talk about indirect taxes VAT/GST etc) This is about why you as senior people in your firms should be thinking about indirect taxes, and why you should be gearing up your staff capabilities It is about the future direction of the tax world VAT is not just a European Tax. There are over 150 developed countries around the world where your clients do business and they need to know about indirect taxes in the same way as they need to know about direct taxes

Globalisation The way we do business is changing as technology changes More and more businesses operate across borders. This causes issues for taxation. Who has the taxing rights? VAT/GST is ahead of direct tax in how we tax businesses and where we tax them The BEPS report recognises this in its comments on the digital economy There is a growing focus globally on indirect tax as opposed to direct tax This trend has gathered pace as governments around the world reduce corporate tax to attract inward investment, and have had to raise indirect taxes to replace lost revenues

What does this mean for your practices? Structuring for both domestic and international business for corporate tax purposes remains important BUT, increasingly one of the first questions businesses are asking is "what are the VAT/GST implications?” in your country Quality local indirect tax advice is essential to support these businesses – your clients You need competent indirect tax advisers in your practices if you are going to service the clients of your Nexia colleagues. Advisory indirect tax services are generally sold at premium rates

What is the Nexia SIG about? The ability to provide indirect tax advice, compliance and support services which are a necessity for all businesses operating in your country The ability, following on from the above, to generate further client work and sell other services Training and "up skilling" your staff as the legislation becomes more complex and case law becomes more important, and tax authorities focus increasingly on indirect taxes

Indirect Tax Group objectives Provide a regular forum for those advising on indirect tax with a view to improving knowledge and quality of services Provide training and education Develop the Nexia website as a platform for showcasing Nexia indirect tax services and marketing to Nexia colleagues and clients Leverage off the shared advice and training to create a network of indirect tax advisers able to win clients and generate fee income Share best practice Identify business opportunities arising out of changes to indirect tax legislation and case law Build the Nexia brand  

Definition of success Within the EU VAT/GST is already a mature tax Over the next 5 to 10 years we expect to see a global growth in the importance of indirect taxes We therefore expect to see; Identifiable and measurable indirect tax fees to emerge for those engaged in indirect tax advisory work Recruitment growth of specialist indirect tax advisors in Nexia firms ( we already have evidence of this outside the EU) A measurable increase in cross border work for Nexia clients and global collaboration Co-operation between Nexia firms on joint marketing initiatives to multinational clients A growing global indirect tax network

Indirect Tax Group committee members John Voyez, Smith & Williamson, London (Chair) Alexander Michelutti, Ebner Stolz, Germany Bas Opmeer, FSV, Netherlands Katrien Huysse, VGD, Belgium Pratik Shah, SKP, India Lam Fong Kiew, Nexia TS, Singapore Cliff Benderoff, Nexia Friedman, Canada Ellen McCabe, CliftonLarsonAllen, America Murray Howlett, Pilot Partners, Australia Craig McCormick, Nexia, Australia

EU VAT rates 2013 (with corporate tax rates in brackets) Global VAT/GST rates versus Corporate Tax rates EU VAT rates 2013 (with corporate tax rates in brackets) Austria 20% (25%) Belgium 21% (33.9%) Bulgaria 20% (10%) Croatia 25% (20%) Cyprus 18% (12.5%) Czech Republic 21% (19%) Denmark 25% (25%) Estonia 20% (21%) Finland 24% (24.5%) France 20% (33.33%) Germany 19% (29.55%) Greece 23% (26%) Hungary 27% (19%) Ireland 23% (12.5%) Average EU VAT rate 20.36% (22.85%) Italy 21% (31.4%) Latvia 21% (15%) Lithuania 21% (15%) Luxembourg 15% (29.22%) Malta 18% (35%) Netherlands 21% (21%) Poland 23% (23%) Portugal 23% (25%) Romania 24% (16%) Slovak Republic 20% (23%) Slovenia 20% (17%) Spain 21% (30%) Sweden 25% (22%) UK 20% (23%)

Asia Thailand 7% (20%) Vietnam 10% (25%) Cambodia 10% (20%) Korea (South) 10% (24.2%) Pakistan 17% (35%) Average Asia VAT rate 12.39% (22.49%)

South America Argentina 21% (35%) Bolivia 13% (25% Brazil 19% (34%) Colombia 16% (25%) Ecuador 12% (22%) El Salvador 13% (30%) Guatemala 12% (31%) Honduras 12% (35%) Mexico 16% (30%) Panama 7% (25%) Paraguay 10% (10%) Peru 18% (30%) Uruguay 22% (25%) Venezuela 12% (34%) Average Latin America VAT rate 12.87% (27.61%)

Caribbean Bahamas * (0%) Barbados 17.5% (25%) Bermuda * (0%) Costa Rica 13% (30%) Jamaica 16.5% (25%) Trinidad & Tobago 15% (25%) * No general turnover tax – but Bahamas will introduce VAT on 1st December 2014

Middle East and Others Egypt 10% (25%) Australia 10% (30%) Canada 15% (26%) Japan 5% (38.01%) Mauritius 15% (15%) New Zealand 15% (28%) Israel 18% (25%) Russia 18% (20%) South Africa 14% (28%) Switzerland 8% (18.01%) Turkey 18% (20%) Average OECD VAT rate 19.06% (25.32%)

Summary - Why you need to take Indirect Taxes seriously! “ Not one cent should be raised unless it is in accord with the law” (Emperor Napoleon Bonaparte, 1805) “Make sure your Nexia clients pay the right amount of indirect tax by ensuring your have access to competent indirect tax advisers” (John Voyez, Nexia 2014)

John Voyez Smith & Williamson © 2014 Nexia International Limited. All rights reserved. The trade marks NEXIA INTERNATIONAL, NEXIA and the NEXIA logo are owned by Nexia International Limited. Nexia International and its member firms are not part of a worldwide partnership. Member firms of Nexia International are independently owned and operated. Nexia International does not accept any responsibility for the commission of any act, or omission to act by, or the liabilities of, any of its members.