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Recent VAT Developments

Kitty Miv, Editor
24 November, 2021

It's been a while since we took a look at indirect taxes, so this week, we will be turning our attention to various recent VAT developments, starting with Cyprus, where the authorities recently unveiled plans reduce the value-added tax rate on the supply of electricity to low-income households, in response to high international energy prices.

The rate will be lowered from 19 percent to five percent for six months, the Council of Ministers agreed on November 4, with the measure implemented immediately after its approval by the European Commission.

Meanwhile, in Vietnam, VAT rate cuts on various goods and services recently come into force, effective until the end of this year.

A 30 percent reduction is in place from November 1 in relation to the VAT chargeable on:

  • all forms of transportation;
  • accommodation services;
  • food and beverage services;
  • travel agency and tour operator services, and support services related to the promotion and organization of tours;
  • publishing products and services;
  • audiovisual entertainment;
  • artwork;
  • cultural activities; and
  • sports and entertainment services (excluding digitally traded services, including software).

In Europe, the European Commission opened infringement proceedings relating to Denmark, Lithuania, and Croatia for failing to properly implement the new value-added tax rules covering e-commerce.

The new rules are intended to simplify VAT for companies and consumers involved in cross-border online sales within the EU and to create a fairer environment for EU sellers by removing the VAT exemption for low-value imports from outside the European Union.

The Commission said that since Denmark, Croatia and Lithuania have failed to provide clear explanations on the way they have transposed these directives, it cannot check that these Member States have completely and correctly transposed the relevant provisions into national law.

And last but not least, the authorities in Aruba have agreed to implement a value-added tax, to shore up the country's finances, in talks with the Dutch Government.

The VAT regime is expected to be implemented from 2023 and would closely follow international best practices, including the standards drawn up by the OECD.

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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