The General Authority of Zakat and Tax GAZT has issued VAT guidelines regarding the transitional provisions of the rate increase as of July , shedding light on how to deal with the signed contracts and VAT invoices before and after the rate increase and the continuous supplies of goods or services by a taxable entity. Specifically, for continuous supplies, the guidelines state that, provided that the following conditions are met:. The guidelines also provide sample transactions where the tax point varies and the rates should apply in each case.
Ghana Last reviewed 29 July Standard rate scheme: Under the flat rate scheme this is the CHRL: 1. Gibraltar Last reviewed 30 June Greece Last reviewed 15 August Greenland Last reviewed 27 May Guatemala Last reviewed 28 May Guernsey, Channel Islands Last reviewed 01 July Guyana Last reviewed 03 August Honduras Last reviewed 20 July Hungary Last reviewed 30 June Iceland Last reviewed 03 August India Last reviewed 28 June Indonesia Last reviewed 28 June Iraq Last reviewed 26 May Ireland Last reviewed 01 July Isle of Man Last reviewed 24 August Israel Last reviewed 30 June Italy Last reviewed 12 July Jamaica Last reviewed 03 June Japan Last reviewed 03 August Jersey, Channel Islands Last reviewed 05 July Jordan Last reviewed 26 July Kazakhstan Last reviewed 23 July Kenya Last reviewed 01 July Korea, Republic of Last reviewed 25 June Kosovo Last reviewed 21 July Kuwait Last reviewed 26 May Kyrgyzstan Last reviewed 29 June Latvia Last reviewed 05 July Lebanon Last reviewed 15 June Libya Last reviewed 26 May Liechtenstein Last reviewed 24 June Lithuania Last reviewed 16 August Luxembourg Last reviewed 01 July Madagascar Last reviewed 08 July Malawi Last reviewed 10 February Malaysia Last reviewed 21 July Maldives, Republic of Last reviewed 09 June Malta Last reviewed 03 September Mauritania Last reviewed 30 June Mauritius Last reviewed 23 July Mexico Last reviewed 21 July The VAT rate increase will have a significant impact on poor households, although the blow is somewhat softened through a higher than inflation increase in social grants and the zero rating of basic food items, which remain intact.
However, it is also proposed that from 1 April , only brown bread and whole wheat brown bread will be zero rated, whereas rye or low GI bread will become subject to the new standard rate from that date. The VAT rate increase was motivated as being necessary to meet spending commitments and to prevent further erosion of public finances. The VAT rate increase was preferred over an increase in personal income tax PIT and an increase in the corporate tax rate.
A concern was raised that an increase in PIT would constrain growth and investment, and that companies may respond to a corporate tax rate increase by raising prices, lowering wages or retrenching workers. The DTC found that multiple VAT rates add significantly to the complexity of the VAT system, and pointed out that a number of so-called luxury goods, including motor vehicles, cell phones, perfume and photographic equipment already bear an ad valorum excise charge, upon which VAT is again levied.
The restrictions for eligible contractual recipients of supplies — e. In addition, importers will be required to consider the impact of increased import VAT from 1 July and may wish to consider whether it is possible for some imports to be accelerated, to avoid negative cashflow impacts, or additional cost, where import VAT cannot be recovered.
For additional information with respect to this Alert, please contact the following:. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated.
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