Reduced VAT rate to increase from 6% to 9%

With effect from 1 January 2019 the government is planning to increase the reduced VAT rate from 6% to 9%.

How businesses should prepare

It is important that businesses begin preparing for the increase as of now, as the new rate will affect:

  • the administrative records;
  • the price of goods and services;
  • invoicing.

For quotations drawn up in 2018 for the supply of goods or services  occurring in 2019, businesses should already use the new 9% rate.

Payments made in 2018 using the 6% rate

It is the opinion of the government that businesses already have a substantial administration for tax related purposes. Therefore, if a payment is made in 2018 for the supply of goods or services  occurring in 2019, the 6% rate applies. Examples include concert or season tickets bought in 2018 for events occurring in 2019. The 9% rate applies to payments made from 1 January 2019.

Increase included in 2019 Tax Plan

The government is planning to include the  increase of the VAT rate in the 2019 Tax Plan, which will be published on Budget Day 2018. The House of Representatives and the Senate have yet to approve the increase.

Ministry responsible