Due to surging inflation in the country, Germany has extended the VAT reduction on hospitality services to 31 December 2023.
The VAT rate for hospitality services was initially reduced from19% to 7% and was due to expire on 31 December 2022.
We can expect other countries to adopt similar fiscal measures as inflation continues to have a significant impact on the tax measures countries deploy.
Governments often use budgets as a platform to showcase their fiscal policies for the coming year, and Belgium has signalled its intent to refine its tax measures in the coming year.
Proposals in their budget include:
Once again, countries are targeting specific community agendas, by adapting tax measures with a focus on advancing the health of individuals.
Belgium is a compliant territory for Tungsten Network and will accommodate any new VAT rates as part of our solution.
We recently communicated that Swiss government were intending to increase VAT rates in the country, for the reasons outlined here. The Swiss government has now confirmed the change in VAT rates in line with the following:
The increase will come into effect on 1 January 2024.
Further information around the VAT rate increase is expected from the Swiss tax authorities before the implementation of the change.
Inflation is spiralling across Europe, compelling multiple government to closely scrutinise their fiscal policies. While typically this year we have seen governments target niche VAT rates, such as energy, gas or food, some governments are making more radical changes by overhauling their standard and reduced rates.
Luxembourg is one such country – due to inflation standing at 6.9% in September 2022, it has been driven to review its tax measures. To this effect, Luxembourg has now announced a temporary decrease of the standard, intermediary and reduced VAT rate applied to goods and services, in line with the following:
These rates will apply from 1st January 2023 to 31 December 2023. It is expected that the VAT rates will return to their original rate at the start of 2024.
Tungsten is compliant in Luxembourg and supports all valid VAT rates in the country. Tungsten will ensure the new VAT rates are integrated as part of our solution once effective.
On 7 November, the Parliament of Singapore approved the Goods and Service Tax (Amendment) bill passing two GST rises beginning 2023.
The GST rate increases will be staggered over two stages:
(i) from 7% to 8% with effect from 1 Jan 2023; and
(ii) from 8% to 9% with effect from 1 Jan 2024.
To prepare GST-registered businesses for the first rate change, the government has published the e-Tax Guide: 2023 GST Rate Change: A Guide for GST-registered Businesses, and a set of Frequently Asked Questions supplements the e-Tax Guide.
The Isle of Man is advancing a distinctly ‘green’ agenda by reducing VAT for specific energy-saving materials to promote environmental benefits.
Further to the introduction of the Value Added Tax Act (Amendment)(No.3) Order 2022, zero rate VAT will be applied to supplies of services and installation of energy-saving materials.
These supplies were previously subject to the reduced rate of 5%.
The implementation will take place retroactively, from 1st April 2022 to 31 March 2027.
The Order also expands the scope to energy-saving materials, to include water and wind turbines, and again serves to underline how fiscal policies can promote wider societal agendas.
The Ministry of Finance in Vietnam has proposed to reduce the VAT on petrol and oil by 20% or 50%, lasting for six months.
According to the Ministry, an increase in inflation is occurring in many countries, and the global oil price will continue to fluctuate. For this reason, it is imperative to reduce taxes on petrol and oil to curb inflation and stimulate the economy.
The proposal has been passed onto the National Assembly Standing Committee for consideration.
The Russia / Ukraine conflict has compelled many countries to review their fiscal policies, especially in relation to electric, gas and heating – especially as Russia serves as conduit for many of these essential supplies.
Further to Royal Decree No. 2022015061, which entered into force on 1 August 2022, the Belgium tax authorities have cited the following changes:
Considering the continued conflict and rising inflation globally, we expect many other countries to enact similar fiscal policies over the coming autumn and winter.
2020 and 2021 saw a proliferation in the tax rates countries deployed as a direct response to the unfolding covid pandemic.
2022 has seen countries attempt to steady their tax rates, but as part of the transition to a post-covid era, countries are still factoring in the pandemic as part of their wider fiscal agendas.
Belgium is one such country which envisages the effects of covid extending into the winter of 2022, as it announced that goods imported to combat covid-19 will be exempt from VAT until 31 December 2022.
Decree – Law No.80 has proposed several mitigation measures specifically designed to assist natural gas and energy providers.
The following measures have been anticipated:
Countries across Europe continue to review their fiscal tax rates considering rising inflation, and also as economies strive to pick up pace in a post-covid era.
Finland has reduced the VAT rate on electricity from 24% to 10% until 30 April 2023.
Tungsten Network offers a compliant e-invoicing solution in Finland and our Web Form solution supports all valid VAT rates in the country.
In view of the coming winter, combined with spiralling inflation, multiple governments across Europe are re-assessing gas and energy prices and reviewing VAT rates.
Spain has acted decisively to reduce the VAT rate, by reducing VAT on gas from 21% to 5%.
The measure is intended to last until the end of the year but may be extended.
Tungsten Network supports all valid rates for Spain as part of our Web Form solution and continues to monitor VAT rates in the country.
Following the lead of multiple countries in Europe, Portugal has lowered VAT on gas and electricity to from 23% to 6% in the wake of inflation in the country.
We expect other European countries to follow a similar trajectory in the coming months and are closely monitoring changing tax rates both in Europe and globally.
Decree No.262/022 has re-introduced the VAT rate for certain products relating to tourism.
Residents can benefit in particular from gastronomic services, provided by bars, cafes, restaurants and hotels, with some exceptions.
The busy fiscal trajectory continues this year in Romania.
The Romanian Tax Administration, ANAF (Agentia Nationala de Administrare Fiscala), is proposing a VAT rate increase in line with the following:
Tungsten Network continually reviews its solution in Romania and supports all current valid VAT rates in Romania.
2022 has seen multiple countries adopting fiscal measures with a distinctly ‘green’ agenda. Such initiatives demonstrate that the VAT framework is intrinsically linked to broader social programmes.
Belgium is following the lead of its European neighbours in engineering markedly ‘green’ measures.
To this effect, the Green Party in Belgium has put forward a proposal to remove VAT on fruits and greens, citing, among other arguments, the spiralling cost of living fuelled by inflation.