Central and Eastern Europe Atlas* for the Retail and Consumer Sector

Transcription

1 Central and Eastern Europe Atlas* for the Retail and Consumer Sector Bulgaria, Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Latvia, Lithuania, Moldova, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Ukraine *connectedthinking

2 Retail and Consumer Products sector in CEE Retail and consumer products (R&C) companies are currently facing a unique combination of market forces which are making the sector increasingly challenging. Profit margins and the existing growth opportunities for companies in the sector are limited by a deflationary operating environment, market saturation, changing demographics and reduced consumer confidence in a time of financial turmoil. Besides these forces, there is the even more direct and immediate impact of increasing competition, particularly from alternative sales channels, and a redefining of the traditional supplier and retailer roles, notably through the increasing supply chain power of retailers at the expense of consumer product manufacturers. Moreover, tax and legal aspects further burden the sector s development. The key to successful planning is to assess the critical issues and proactively seek solutions to alleviate the related risks. As today s leading economic growth region, CEE is a priority in the expansion plans of R&C companies. With the region s R&C sector growing at a rapid pace, PwC decided to conduct an informal survey in CEE countries so we can better anticipate your information needs. This brochure presents the results of this survey. We concluded that the issues shown on the following pages are the most critical from a tax perspective for R&C companies as they have a significant degree of risk and a high materiality. These issues have been identified in most of the CEE countries. Common technical issues for the CEE region retail and consumer products sector Bonuses, discounts received from suppliers and posttransaction rebates suppliers offer significant bonuses, discounts or post-transaction rebates to retailers to stimulate sales. However, these amounts may trigger profit tax and VAT costs for the suppliers if the invoicing method is incorrect. As such, it is important to analyse and classify the price reductions properly as either discounts or services. Returnable containers adjustment settlements for movement of such packages without billing between producers and retailers can trigger profit tax and VAT liabilities for producers. Inventory losses due to the nature of the business, retailers and producers incur significant inventory losses. Although this may translate into important profit tax and VAT liabilities in most CEE countries, major tax savings can be achieved for damaged / expired goods, technological losses and perishables. Return / re-sale of goods to suppliers the invoicing method of the products may trigger potential VAT risks at the level of the supplier. Review of ERP settings, VAT coding in ERP software or human error can lead to miscoding in the ERP system which may generate VAT liabilities. E-invoicing and e-archiving huge costs are incurred by both producers and retailers from archiving received and issued invoices. Under these circumstances, implementing electronic invoicing and archiving can result in significant savings if performed according to legislative requirements. Promotion, marketing and advertising activities, advertising services, voucher schemes and merchandising / sampling retailer and supplier promotional activities may generate profit tax and VAT risks. Suppliers may also have VAT benefits from using voucher schemes.

3 Specific issues applicable in each CEE country Furthermore, we have also identified a number of tax and legal issues common across the CEE region: Intra-group transactions / Cross-charges / Cost-sharing agreements Individual tax implications of prizes granted VAT rounding Consumer protection regulation VAT rates Mixed / composite / single supplies Packaging - environmental tax Use of economic customs procedures (e.g. free warehouse, inward processing relief) Invoice control (non-complete supplies) Authorised Economic Operator Electronic audits Franchise agreement Warranty returns Infrastructure works Proofs of origin Competition regulations Entrance and listing fees Coolers Implementing group logistics Cash register issue Alcohol used for technological purposes Inappropriate discharge of customs procedure Transfer pricing First-sale principle Excise duties on perfumes Specific authorisations for ancillary activities Euro conversion Product fee Lease agreement Deduction right information to be mentioned on documents Cultural tax CEE Atlas of R&C tax and legal issues In today s world, to stay ahead of competition, many multinationals are expanding their business models on a regional level. In this context, it was only natural for us consultants to follow this trend. has developed a strong and reliable network of dedicated industry professionals for R&C companies. This extensive team of professionals is looking to help businesses extract value from their multinational operations, to develop a competitive advantage across the value chain, and to ensure that all corporate stakeholder expectations are recognised and met. Building brand trust, brand growth and brand effectiveness is the purpose of our practice. To support this, we have specifically designed the CEE Atlas to give you a broad tax perspective of the R&C issues in our region. To raise your awareness of potential tax and legal issues which your company may face, the CEE Atlas includes a map of each country, displaying their specific tax and legal issues and defining the level of risk and degree of materiality. For more details regarding these issues, related risks and proposed solutions derived from our local expertise, please contact our local offices using the contact details specified on each country map. Mihaela Mitroi PwC CEE R&C TLS Leader

4 Bulgaria Your key contacts Irina Tsvetkova Partner Phone : irina.tsvetkova@bg.pwc.com Tania Pavlova Senior Manager Phone: tania.pavlova@bg.pwc.com

5 The map of tax issues in Bulgaria Level of materiality Very high 1 High 2 3 Consumer protection regulation VAT roundings Packagingenvironmental tax Use of economic customs procedures First-sale principle Intra-group transactions/ cross-charges/ cost sharing agreements Transfer pricing Returnable containers Bonuses /discounts received from suppliers/post Transaction rebates Invoice-control (non-complete supplies) Lease agreement Promotions / E-invoicing marketing activities / advertising services / voucher schemes / merchandising / Review sampling of ERP settings, VAT coding in ERP Inventory losses/ damages/ shrinkages Authorized Economic Operator Returns/ re-sales of goods to suppliers 4 D C B A Level of risk High Very high 3

6 Czech Republic Your key contacts Zuzana Vaneckova Partner Phone: Josef Machycek Senior Manager Phone: Jan Fischer Senior Manager Phone:

7 The map of tax issues in Czech Republic Level of materiality Very high 1 High Infrastructural works Lease agreement Returnable containers VAT roundings Franchise agreement Warranty returns Inventory losses/ damages/ shrinkages Authorized Economic Operator Transfer pricing VAT rates Individual tax implications of prizes granted E-invoicing Entrance and listing fees Coolers Bonuses /discounts received from suppliers/post Transaction rebates Thin capitalisation Voucher schemes Review of ERP settings, VAT coding in ERP Returns/ re-sales of goods to suppliers Intragroup transactions/ cross-charges/ cost sharing agreements Promotions / marketing activities / advertising services / voucher schemes / merchandising / sampling Mixed/ composite/ single supplies D C B A Level of risk High Very high 5

8 Estonia Your key contacts Villi Tõntson Director Phone: Tanja Kriisa Manager Phone:

9 The map of tax issues in Estonia Very high 1 Bonuses /discounts received from suppliers/post Transaction rebates Authorized Economic Operator Inappropriate discharge of customs Marketing activities Level of materiality High 2 3 Electronic audits Packagingenvironmental tax Voucher schemes Consumer protection regulation Proof of origin Use of economic customs procedures Transfer pricing Intra-group transactions/ cross-charges/ cost sharing agreements E-invoicing Returnable containers Individual tax implications of prizes granted 4 Mixed/ composite/ single supplies Returns/ re-sales of goods to suppliers D C B A Level of risk High Very high 7

10 Georgia Your key contacts Courtney Fowler Partner Phone: Izabela Gutidze Director Phone:

11 1 Warranty returns 2 High Proof of origin VAT roundings Coolers 3 4 Individual tax implications of prizes granted Level of materiality Very high The map of tax issues in Georgia Invoice-control (non-complete supplies) Returnable containers Certainty of deduction right documentation requirements D Bonuses /discounts received from suppliers/post Transaction rebates Promotions / Inventory losses/ damages/ shrinkages Transfer pricing Returns/ re-sales of goods to suppliers C marketing activities / advertising services / voucher schemes / merchandising / sampling Consumer protection regulation B A High Very high Level of risk 9

12 Hungary Your key contacts Gabriella Erdos Partner Phone: Zsolt Tenczer Senior Manager Phone:

13 The map of tax issues in Hungary Level of materiality Very high 1 High Proof of origin Inventory losses/ damages/ shrinkages Authorized Economic Operator Infrastructural works Implementing group logistics Entrance and listing fees Intra-group transactions/ cross-charges/ cost sharing agreements Consumer protection regulation Individual tax implications of prizes granted Electronic audits Enforcement of competition regulations Cultural tax Review of ERP settings, VAT coding in ERP Returns/ re-sales of goods to suppliers Product fee - packaging / environmental tax Returnable containers Use of economic customs procedures Bonuses /discounts received from suppliers/post Transaction rebates Transfer pricing Promotions / marketing activities / advertising services / voucher schemes / merchandising / sampling E-invoicing D C B A Level of risk High Very high 11

14 Kazakhstan Your key contacts Courtney Fowler Partner Phone: Richard Bregonje Director Phone:

15 1 Inventory losses/ damages/ shrinkages Bonuses /discounts received from suppliers/post Transaction rebates VAT roundings 2 High Promotions / Transfer pricing Lease agreement Use of economic customs procedures 3 Level of materiality Very high The map of tax issues in Kazakhstan marketing activities / advertising services / voucher schemes / merchandising / sampling Invoice-control (non-complete supplies) Returns/ re-sales of goods to suppliers Returnable containers 4 VAT rates D C B A High Very high Level of risk 13

16 Latvia Your key contacts Zlata Elksnina-Zascirinska Partner Phone: Vita Sakne Senior Manager Phone:

17 The map of tax issues in Latvia Very high 1 VAT roundings Entrance and listing fees Transfer pricing Level of materiality High 2 3 Proof of origin Cash register issue Packagingenvironmental tax Warranty returns Implementing group logistics Individual tax implications of prizes granted Consumer protection regulation Coolers Intra-group transactions/ cross-charges/ cost sharing agreements Use of economic customs procedures Franchise agreement Mixed/ composite/ single supplies 4 Authorized Economic Operator VAT rates D C B A Level of risk High Very high 15

18 Lithuania Your key contacts Kristina Bartuseviciene Partner Phone: Jurate Stulgyte Senior Manager Phone:

19 The map of tax issues in Lithuania Very high 1 Packagingenvironmental tax VAT roundings Returnable containers Bonuses /discounts received from suppliers/post Transaction rebates E-invoicing Transfer pricing Level of materiality High Use of economic customs procedures Warranty returns Enforcement of competition regulations Inventory losses/ damages/ shrinkages Individual tax implications of prizes granted Implementing group logistics Returns/ re-sales of goods to suppliers Mixed/ composite/ single supplies Promotions / marketing activities / advertising services / voucher schemes / merchandising / sampling D C B A Level of risk High Very high 17

20 Moldova Your key contacts Mihaela Mitroi Partner Phone: Andrian Candu Senior Manager Phone:

21 The map of tax issues in Moldova Level of materiality Very high 1 High Lease agreement Euro conversion Proof of origin Excise duties on perfumes Mixed/ composite/ single supplies Coolers Franchise agreement Royalties Transfer pricing Limited commercial margin Inventory losses/ damages/ shrinkages Competition regulations Use of customs procedures Returns/ re-sales of goods to suppliers Entrance and listing fees Bonuses /discounts received from suppliers/post Transaction rebates VAT rates Intra-group transactions/ cross-charges/ cost sharing agreements Consumer protection regulation B2B cash payments Invoice control Cash register issue Promotions / marketing activities / advertising services / voucher schemes / merchandising / sampling Individual tax implications of prizes granted Thin capitalization Review of ERP settings, VAT coding in ERP D C B A Level of risk High Very high 19

22 Poland Your key contacts Mike Ahern Partner Phone: Anna Krzysztoń Senior Manager (Consumer) Phone no.: Katarzyna Szafranska-Blank Senior Manager (Retail) Phone: Magdalena Zasiewska Director (Consumer) Phone:

23 The map of tax issues in Poland Level of materiality High Very high Product fee Infrastructure works Proof of origin Inventory losses/ damages/ shrinkages Cash register issue Euro conversion Packagingenvironmental tax VAT roundings Implementing group logistics Inappropriate discharge of customs procedure Specific authorization for ancillary activities Individual tax implications of prizes granted Electronic audits Consumer protection regulation Alcohol used for technological purposes Entrance and listing fees Lease agreement Invoice-control (non-complete supplies) Authorized Economic Operator Bonuses /discounts received from suppliers/post Transaction rebates Returns/ re-sales of goods to suppliers Intra-group transactions/ cross-charges/ cost sharing agreements Use of economic customs procedures Enforcement of competition regulations Franchise agreement Returnable containers E-invoicing Review of ERP settings, VAT coding in ERP Transfer pricing VAT rates Mixed/ composite/ single supplies Promotions / marketing activities / advertising services / voucher schemes / merchandising / sampling D C B A Level of risk High Very high 21

24 Romania Your key contacts Mihaela Mitroi Partner Phone: Roxana Popel Senior Manager Phone:

25 The map of tax issues in Romania Level of materiality Very high 1 High 2 3 Excise duties on perfumes Inappropriate discharge of customs Alcohol used for technological purposes Specific authorizations for ancillary activities Individual tax implications of prizes granted Packagingenvironment tax Royalties Intra-group transactions/ cross-charges/ cost sharing agreements Franchise agreement Promotions / marketing activities / advertising services / voucher schemes / merchandising / sampling Implementing group logistics Deduction right information to be mentioned on documents Bonuses /discounts received from suppliers/post Transaction rebates Returnable containers Inventory losses/ damages/ shrinkages Enforcement of competition regulations Transfer pricing Authorized Economic Operator First-sale principle Review of ERP settings, VAT coding in ERP Proof of origin Consumer protection regulation Use of economic customs procedures 4 D C B A Level of risk High Very high 23

26 Russia Your key contacts Irina Martakova Partner Phone: Alina Lavrentieva Partner Phone:

27 1 Very high The map of tax issues in Russia 2 High 3 Merchandising (receipt of POSMS equipment) Entrance and listing fees Surpluses/ shortages Cost sharing agreement Distribution of advertising materials 4 Application of decreased VAT rates Lease arrangement Receipt of discounts / bonuses Level of materiality Returns of goods Franchise agreements Merchandising (advertising services) D C B A High Very high Level of risk 25

28 Serbia Your key contacts Rene Bijvoet Partner Phone: Branka Rajicic Senior Manager Phone:

29 The map of tax issues in Serbia Level of materiality Very high 1 High 2 3 E-invoicing VAT roundings Inventory losses/ damages/ shrinkages Review of ERP settings, VAT coding in ERP Returns/ re-sales of goods to suppliers Invoice-control (non-complete supplies) VAT rates Mixed/ composite/ single supplies Promotions / marketing activities / advertising services / voucher schemes / merchandising / sampling Bonuses /discounts received from suppliers/post Transaction rebates Electronic audits Returnable containers 4 D C B A Level of risk High Very high 27

30 Slovakia Your key contacts Christiana Serugova Partner Phone: Rastislava Krajcovicova Senior Manager Phone : rastislava.krajcovicova@sk.pwc.com

31 The map of tax issues in Slovakia Level of materiality Very high 1 High 2 3 Euro conversion VAT roundings Entrance and listing fees Inventory losses/ damages/ shrinkages VAT rates Cash register issue Intra-group transactions/ cross-charges/ cost sharing agreements Returns/ re-sales of goods to suppliers E-invoicing Bonuses /discounts received from suppliers/post Transaction rebates Transfer pricing Review of ERP settings, VAT coding in ERP Franchise agreement Returnable containers Promotions / marketing activities / advertising services / voucher schemes / merchandising / sampling Electronic audits 4 D C B A Level of risk High Very high 29

32 Slovenia Your key contacts Janos Kelemen Partner Phone:

33 The map of tax issues in Slovenia Very high 1 Bonuses /discounts received from suppliers/post Transaction rebates Promotions / marketing activities / advertising services / voucher schemes / merchandising / sampling Level of materiality High 2 3 E-invoicing Inventory losses/ damages/ shrinkages VAT rates Returns/ re-sales of goods to suppliers Mixed/ composite/ single supplies Application of the use and enjoyment rules 4 D C B A Level of risk High Very high 31

34 Ukraine Your key contacts Ron Barden Partner Phone: Slava Vlasov Director Telephone:

35 The map of tax issues in Ukraine Level of materiality Very high 1 High 2 3 Intra-group transactions/ cross-charges/ cost sharing agreements Cash register issue Warranty returns Returnable containers Consumer protection regulation Individual tax implications of prizes granted Bonuses /discounts received from suppliers/post Transaction rebates Inventory losses/ damages/ shrinkages Coolers Promotions / marketing activities / advertising services / voucher schemes / merchandising / sampling 4 D C B A Level of risk High Very high 33

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