REDUCTION IN STANDARD RATE OF VAT
Revenue have recently announced as part of the July Stimulus package a temporary reduction in the standard rate of VAT from 23% to 21%. All other VAT rates will remain unchanged.
This is due to take effect from the 1st of September and will remain in place until the 28th of February 2021.
While this is a welcome development businesses may face a number of issues and challenges in relation to the rate reduction. It is important that businesses are ready for the change and that they review their operations in advance of the rate change.
Typical questions that may arise for businesses include:
- Can the sales systems, including point of sales terminals, be updated to reflect the reduced rate?
- Will the business need to adjust the price of goods/services provided to reflect the rate cut?
- If the business pays their VAT liability by way of a monthly direct debit, does the rate reduction allow for a reduction in the monthly payment?
- If the supply spans two periods with different VAT rates, the business will need to ensure that the correct rate of VAT is charged.
- If an advanced payment has been received in respect of a supply, what is the correct VAT rate to be charged in respect of the supply?
If you have any queries in relation to the above please do not hesitate to contact a member of the Cooney Carey tax department at 01 677 9000 or by email at email@example.com
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