Covid-19 VAT Implications Worldwide
The Covid-19 virus is affecting almost every area of business and the VAT implications of Covid-19 are no different. With an unprecedented amount of employees working from home, international travel bans abound in major trading countries, Covid-19’s VAT impact is significant. The silver lining is that many governments are implementing VAT cuts and tax payment deferments to relieve the stress from businesses and the public.
VAT Payment Deferments
The EU Commission has suggested countries provide Covid-19 VAT payment holidays and act in unison. As a result, many tax authorities are stepping up to the plate to help struggling businesses in this time of crisis. Tax authorities are providing a deferment of tax payments until the epidemic clears. Most EU member states have implemented some kind of Covid-19 VAT payment deferment for several months. Other countries that have implemented include Colombia, Australia, Japan, Israel, Jersey, Costa Rica, Canada, United Kingdom, Vietnam, South Korea, USA, India and Thailand with many countries to follow suit soon.
The Removal of VAT on Hotels & Accommodation
Some countries are still trying to hold onto their tourism industries by offering Covid-19 VAT cuts on hotels and accommodation. Malta, Malaysia and Indonesia removed the VAT levy on their hotel and accommodation costs. Although this gesture is well-intentioned, it may be futile due to international travel bans crippling the tourism industry.
VAT Rate Decreases
Some countries are easing the stress of the situation by cutting tax rates on certain goods and services. For example, in Norway, VAT on public transport, cinema, sporting and cultural events will be decreased from 12% to 8%. China has cut tax rates on medical services, medical necessities like masks and protective clothing, catering, accommodation and public transport. Jamaica has plans to cut its general consumption tax from 16.5% to 15%.
How Can VAT Global Help
VAT Global is available for any filing or registration queries you may have in light of these Covid-19 VAT implications. We will be able to assist any companies seeking a VAT payment deferment from their tax authority.
The Covid-19 VAT implications and the measures that various tax authorities have taken are very positive. Multinational and SMEs alike are scared for the future but at least governments are doing what they can from a VAT perspective to relieve some of that fear.