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Kitty Miv, Editor
12 October, 2021

It's rare in this column that more than a week goes by without some significant developments on the VAT front, and, after an examination last week of compliance matters, this week is no exception!

We start in Bahrain, where the Cabinet recently approved a proposal to table a law before Parliament to raise the country's value-added tax rate from next year, according to the state news agency. It has been reported that the Government intends to double the rate of value-added tax to 10 percent, starting January 1, 2022.

Then in Guernsey, where the introduction of a goods and services tax is under consideration, the Policy and Resources Committee warned – ahead of a debate on the proposed tax - that rejecting proposals for the introduction of goods and services tax would result in new levies being required on workers.

The Committee has put forward three options to close the current budget deficit: the introduction of a GST with either a five or eight percent rate, or a three percent "health tax", levied through the social security system. In a statement released ahead of a parliamentary debate, Deputy Peter Ferbrache, President of the Policy and Resources Committee, observed that:

"We know that many States Members are reluctant to adopt a GST as part of the solution to the funding shortfalls we'll face if we are to maintain reasonable public services that meet the growing demand for both current and long-term health and care needs in particular."

"That very big underlying funding gap - up to GBP80m per year by 2025 - does not go away if members reject a GST. A solution will still need to be found."

Meanwhile, in the UK, on October 1, 2021, the rate of value-added tax on the hospitality sector was increased, as planned, reversing in part a tax relief measure that was installed in response to the COVID-19 pandemic.

A five percent rate of VAT had been provided to the industry in response to the COVID-19 pandemic since July 2020. A 12.5 percent rate now applies to the sector's supplies, which will be in place until March 31, 2022.

And finally, in Poland, various provisions from the country's SLIM VAT 2 package – a second package of measures to simplify value-added tax compliance for taxpayers – became effective on October 1.

SLIM VAT 2 is intended to simplify invoicing, reduce the administrative burden on taxpayers, including by improving VAT refund processes, and boost companies' cash flow.

SLIM VAT 2 includes 15 new simplification measures. These include improving the deduction of VAT on cars used for business activities; ensuring more tax-neutral treatment of imported services; simplifying the rules for amending the consideration for imported services; simplifying rules for real-estate transactions; and extending the time to take advantage of bad debt relief from two to three years.

Until next week!


About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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