International VAT Rate Round Up: February 2024

Ecuador

The president proposed to the National Assembly changes in Art. 65 of the Internal Tax Regime Law – increasing the VAT rate from 12% to 15%.
This increase in VAT rate will come into effect from 1 March 2024.

Malaysia

The Sales and Services Tax Authority Implemented a 10% Sales Tax on Low-Value Goods Sold Online from January 2024.
Low-value goods refers to all goods which are sold to consumers at a price not exceeding 500MYR (approx. € 100.00) and are brought to Malaysia by land, sea, or air excluding the following:

• Cigarettes;
• Tobacco products;
• Intoxicating liquors;
• Smoking pipes (including pipe bowls);
• Electronic cigarettes and similar personal electric vaporizing devices; and
• Preparation of a kind of used for smoking through electronic cigarette and electric vaporizing device, in forms of liquid of gel, whether or not containing nicotine.

Sales Tax is charged on the pure sale not including any tax, duty, fee, or other charges such as transportation, insurance or other.
This applies to any person who sells low value goods through an online platform or operates online marketplace.
Any seller with the total sale value of low value goods brought into Malaysia by land, sea or air in 12 months exceeds MYR500.000 (approx. € 100,000) is liable to be registered as seller and account for 10% sales tax on low value goods.
The Sales Tax is reported on a three-monthly basis (Regular quarters or Staggering quarters depending on the company’s registration) in the return LVG-02.

Portugal

With the adoption of the 2024 Budget with Art. 245 are introduced changes in List II of the VAT Code. Explanations of the changes are provided in Circulated Letter No.: 25018 (of 10 January 2024) and 25019 (of 17 January 2024).

An explanation is given of what VAT rate is to be used when meals are provided in a package with alcoholic and soft drinks.

In general, there should be a separation of the items by VAT rates – meals, juices, and coffee are taxable at a reduced rate and alcoholic and soft drinks are taxable at the standard VAT rate.
In cases where there is no separation of the items by VAT rates, the whole package (meals + alcohol) is taxable at the standard VAT rate of 23%.
The actual change in the VAT Code in this regard is that “juices, nectars and carbonated waters or waters containing carbon dioxide or other substances” are deleted from point 3.1 of List II remaining only (3.1 – Provision of food and beverage services, excluding alcoholic beverages and soft drinks.)

Then in Circulated Letter No.: 25018 a description of soft drinks is given:
“Soft drink” – is a liquid consisting of water containing in solution, emulsion, or suspension any of the ingredients foreseen and listed in no. 2 of no. 2 of Ordinance no. 703/96, of December 6, and possibly flavoured and/or carbonated with carbon dioxide.

Spain

On 27 December 2023, the Council of Ministers published a Royal Decree-Law among other measures changing the VAT rates on the supply of electricity, natural gas, and basic foodstuffs.
The tax reductions on electricity and gas will continue but at a higher rate of 10% (this was previously 5%) until the end of 2024 for electricity and during Q1 2024 for natural gas.

Supply of electricity, natural gas and natural fuels:
Electricity contracts with a capacity not exceeding 10kw and a wholesale price of more than €45/MWh for the previous month. From 1 January 2024 until 31 December 2024 taxed at 10%;

Electricity contracts whose holders are recipients of the social voucher with severe vulnerable status. From 1 January 2024 until 31 December2024 taxed at 10%

Intra-Community supplies, imports, and acquisitions of natural gas. From 1 January 2024 until 31 March 2024 taxed at 10%

Intra-Community supplies, imports and intra-Community acquisitions of briquettes and pellets of biomass origin and firewood. From 1 January 2024 until 30 June 2024 taxed at 10%.

VAT on food will be reduced for the first half of 2024 to 0% (from the super-reduced rate of 4%).
The basic necessities will maintain a VAT rate of 0%:

• Ordinary bread, as well as frozen common bread dough and frozen common bread intended exclusively for the production of ordinary bread;
• Bread flours;
• The following types of milk produced by any animal species: natural, certified, pasteurized, concentrated, skimmed, sterilized, UHT, evaporated and powdered;
• Cheeses;
• Eggs;
• Fruits, vegetables, legumes, tubers and cereals, which have the status of natural products in accordance with the Food Code and the provisions issued for its development.

Vietnam

On 29 December 2023, the Government announced Decree 94/2023/ND-CP stipulating the VAT reduction policy – the reduced VAT rate of 8% will continue to apply until the end of June 2024.
The following groups of goods and services are excluded from the reduction:

• Telecommunications;
• Financial activities;
• Banking;
• Securities;
• Insurance;
• Real estate trading;
• Metals and products from prefabricated metals;
• Mining products (excluding coal mining);
• Coke;
• Refined petroleum; and
• Chemical products

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