Low VAT most likely from 6 to 9 percent

HThe Cabinet intends to raise the low VAT rate from 6 percent to 9 percent, the ministry reports. This increase will take effect on January 1, 2019. It is important that you prepare for this rate increase as early as 2018. What does this mean for you? KHN provides information and advice!

What does this mean for you?

The new rate impacts:

• Your administration
• The prices of goods and services
• The processing of new sales prices in checkout and POS systems, quotations, websites, and menus
• Your invoicing and VAT return at the turn of the year. Please note: Quotations you draw up in 2018 for goods or services you supply in 2019 must also be based on a VAT rate of 9 percent.

KHN: Increase not a good thing

VAT is a levy on consumer prices. This means that retail prices for consumers will become 3 percent higher. In exchange for this higher tax revenue, the Cabinet proposes lower income tax and lower corporate income tax for entrepreneurs. The Cabinet is now raising the reduced VAT rate for the first time in 2019. It is clear that KHN does not consider this a good thing. For now, it is important to inform you about this development so that you can prepare for it.

What does this mean for performances taking place in 2019?

If a service is performed in 2019 but payment was already made in 2018, the 6 percent rate still applies. Consider, for example, a reservation for a hotel or restaurant that was paid in advance, while the overnight stay or restaurant visit does not take place until 2019. For payments made from January 1, 2019, the 9 percent rate applies.

Amendment included in the 2019 Tax Plan

The Cabinet's plans are not yet final. The Cabinet intends to include the change to the VAT rate in the 2019 Tax Plan. This plan will be made public on Budget Day 2018. The House of Representatives and the Senate must still approve this plan.

Source: KHN