keeping calm and carrying on
Kitty Miv, Editor
10 April, 2020
This week the news cycle has been, as you might expect, tied up with the developing situation worldwide with regard to the novel Coronavirus, or COVID-19, including the alarming news that UK Prime Minister Boris Johnson had been taken into an intensive care suffering from it, arguably leaving something of a vacuum at the UK government policy-wise, to say nothing of the impact on the PM's nearest and dearest.
However, at the time of writing he appeared to be 'keeping calm and carrying on' (a phrase oft used by Brits in times of crisis...). This mantra also appears to have been adopted by governments throughout the world, albeit with very different approaches and priorities in mind.
Having already announced (in Rishi Sunak's recent budget, and several subsequent announcements) a number of measures designed to mitigate the impact of the pandemic on the economy, the UK confined itself this week to generalities; the Government presumably having more than enough on its plate currently, especially as it approaches what is expected to be the peak of infections with a fairly significant gap at the helm.
To that end, and in keeping with what is – as discussed briefly in last week's column – emerging as a common theme, namely the adjusting of VAT rates on designated medical goods, and the deferral of tax deadlines for affected businesses, it was recently announced by the UK authorities that they would delay ramping up the Making Tax Digital project until a more appropriate time.
When initially introduced in April 2019, the Making Tax Digital project introduced new reporting obligations on value-added tax registered persons, requiring them to keep their records digitally (for VAT purposes only) and provide their VAT return information to HM Revenue and Customs (HMRC) through MTD-compatible software.
A light-touch approach was taken to the enforcement of the regime, and it was agreed that value-added tax-registered businesses would be required to establish digital links for the transmission of data to HM Revenue and Customs only from April 1, 2020. The UK Government has now said that businesses will be allowed an additional year, until April 1, 2021, to establish such digital links.
In Belgium, meanwhile, the Government sought to employ both VAT and deadline adjustments, revealing that value-added tax refunds will be accelerated for all declarations relating to the month of February 2020.
This measure is subject to certain conditions, including that February 2020 VAT declarations must be filed by April 3, 2020 via the Intervat system, and that the requested refund must be for a minimum of EUR245.
Refunds for February VAT declarations will be paid by April 30, 2020 at the latest, instead of by May 29, 2020, the Belgian authorities revealed, although the standard deadline for the VAT deadline remains April 6, 2020 for those not wishing to take advantage of expedited VAT refunds.
In Romania, the authorities approved a proposal to postpone value-added tax payments on imports of COVID-19 testing kits and other items intended to detect and prevent the spread of the virus.
In addition to test kits, this measure applies to imports of protective equipment and disinfectants, medical equipment, and medicines intended to treat people who have contracted the virus.
The Government said that no VAT will be due on imports of these items while the state of emergency is in place and for 30 days following its cessation.
Norway went further, unveiling a package of measures, which included a value-added tax cut for certain industries, and the postponement of advance tax deadlines.
These new measures are as follows:
- A further reduction in VAT for certain industry sectors, including passenger transport, accommodation and parts of the cultural sector, whose supplies are typically subject to a 12 percent VAT rate. The rate was previously lowered to eight percent but the Government has decided to lower this rate still, to seven percent, for transactions during the period April 1, 2020, to October 31, 2020.
- For personal taxpayers, the first instalment of advance tax is postponed from March 15 to May 1, 2020, with the second instalment postponed from May 15 to July 15, 2020.
- For corporate taxpayers, the second instalment of advance tax is postponed from April 15 to September 1, 2020, although electric power enterprises will not be able to postpone advance tax payment on ordinary income.
The Government had previously announced that it would amend corporate tax regulations so that loss-making companies could re-allocate their losses to offset previous years' taxed profits, and permit owners to postpone payments of wealth tax.
Additionally, to support airlines, air passenger tax will be suspended for flights in the period from January 1 to October 31, with the payment of aviation charges postponed until June 31.
Furthermore, the Government previously announced that the payment deadline for the first VAT instalment is to be extended from April 14 to June 10.
Poland took a similar tack, announcing a zero rate of value-added tax for products manufactured or bought by companies that are then donated to help tackle the spread of the COVID-19 virus.
Items newly subject to zero percent VAT include:
- Medical devices;
- Laboratory glass and laboratory apparatus;
- Medicinal products and active substances within the meaning of the Pharmaceutical Law of September 6, 2001;
- Specialized diagnostic tests; and
- Personal protective equipment, including face masks, face shields, safety goggles, overalls, shoe covers, caps, and gloves.
The zero percent VAT rate on the above goods applies from February 1, 2020, until August 31, 2020.
No stranger to bucking the trend, however, France revealed that although various relief measures are to be made available to taxpayers adversely impacted by the global pandemic, VAT would not be affected by this.
In a set of frequently asked questions and answers clarifying recent changes to tax obligations as a result of the COVID-19 virus, the French tax authority explained that tax payment relief does not extend to value-added tax.
The FAQs confirmed that requests for deferral only concern direct taxes and social security contributions, with the payment of indirect taxes (VAT, excise duties, etc.) due on normal deadlines, without any delay.
However, for taxpayers unable to gather all documents necessary for establishing monthly VAT liability, the tax authority will permit them to estimate their VAT payment within a margin of error of 20 percent.
Until next week, do please stay safe and well!
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