International VAT Rate Round Up: May 2023

May 2023 VAT Changes in Belgium

On 29 March 2023, the Belgian Tax Authority published VAT, Royal Decree No 20, extending the application of the 6% reduced VAT rate for electricity and natural gas (used as fuel and heat) until 30 June 2023.

May 2023 VAT Changes in Croatia

The Croatian Tax Authority have extended the application of the 5% reduced VAT rate for Natural Gas and Heating until 31 March 2024.

• 5% natural gas from 1 April 1 2022 to 31 March 31 2024 (previously 13%);
• 5% heating from 1 October 2022 to 31 March 2024 (previously 25%).

May 2023 VAT Changes in Ecuador

The Internal Revenue Service (SRI), through the Fiscal Notaries, carried out national information controls to verify the application of the reduced VAT rate, in the issuance of sales receipts during the days, Friday 7, Saturday 8 and Sunday 9 April 2023, in establishments that were in the national registry of the Ministry of Tourism.

In January this year, the Internal Revenue Service issued Decree 644. This means a temporary VAT reduction to the Holiday VAT rate.

The VAT rate was reduced from 12% to 8% on tourist activities during the below holiday periods in 2023:

• Carnival (18 – 21 February 2023);
• Holy Week (7 – 9 April 2023); and
• All Souls Day and Independence of Cuenca (2 – 5 November 2023).

According to Art.5 of the Tourism Law tourism activities shall be considered the following activities:

• Accommodation;
• food and beverage service;
• transportation, when engaged mainly in tourism, including air transport, maritime, river, land and the rental of vehicles for this purpose;
• operations;
• intermediation, tourist services agency and event organizers, congresses and conventions; and
• Casinos, gambling halls, racetracks and stable amusement parks.

May 2023 VAT Changes in Estonia

On 26 April 2023, the Finance Minister signed the first drafts of tax changes. This includes an increase to the VAT rate (currently 20%):

• The VAT rate will be increased to 22% from 2024;
• The VAT on accommodation services is also planned to rise to the same level from 2025; and
• The 9% discount rate will continue to apply to medicines.

May 2023 VAT Changes in Italy

On 30 March 2023, the Italian Tax Authority published in the Official Gazette Nr. 79 an extension of the 5% reduced VAT rate on gas (domestic and industrial use) until 30 June 2023 – DECREE-LAW 30 March 2023 n. 34, Art.2, paragraph 1.

Other supporting measures related to businesses are mentioned in Art.4:

For the purchase of electricity and natural gas, until 30 June 2023 the companies with high electricity consumption (whose costs per kWh of the electricity component, calculated on the basis of the average for the first quarter of 2023, underwent an increase of more than 30% compared in the same period of 2019) are allowed a partial compensation for the higher costs incurred, in the form of a tax credit, equal to 20% of the expenses incurred.

The tax credit for companies other than those with high electricity consumption is equal to 10% of the expenses incurred.

May 2023 VAT Changes in Portugal

Aiming to lessen the effect of the inflation on the costs of living, Portugal adopted a law introducing a temporary measure – 0% VAT on 12 groups of essential food products.

The Law (Lei n.º 17/2023, de 14 de abril) was published on 14 April 2023 and is effective from 18 April 2023 until 31 Oct 2023.

To ensure proper application of the law, on 14 April 2023 the Portuguese authority published Ofício Circulado N.º: 30257, de 2023-04-14  which includes detailed specifications of the scope of the exemption (zero-rating) .

Below are listed the products to which the measure above applies:

• Cereals and derivatives (i.e. bread, potatoes, pasta);
• Vegetables, fresh or chilled, dried, dehydrated or frozen, even if previously cooked;
• Fruits in the natural state;
• Legumes in dry state;
• Dairy products;
• Meat, fresh or frozen;
• Fresh fish (live or dead), chilled, frozen, dried, salted or in brine, excluding smoked or preserved fish;
• Canned tuna;
• Chicken eggs, fresh, dried or preserved;
• Fats and oils;
• Vegetable-based drinks and yoghurts, without milk and dairy products, made from dried fruits, cereals or preparations based on cereals, fruits, vegetables or horticultural products; and
• Dietetic products intended for enteral nutrition and gluten-free products for celiac patients.

May 2023 VAT Changes in Slovakia

The National Council of the Slovak Republic approved the permanent application of the 10% reduced VAT rate for the following services (in force 1 April 2023):

• Accommodation;
• Restaurant and catering;
• Transportation of people by cable cars and ski lifts;
• Entrance fees to indoor and outdoor sports facilities; and
• Entrance fees for artificial swimming pools.

The VAT rate applies only for immediate consumption (on the spot), otherwise e.g., for delivery and takeaway food, the standard tax of 20% will be applied.

May 2023 VAT Changes in Vietnam

The Ministry of Finance have proposed that the VAT rate in Vietnam be reduced from 10% to 8% for the remainder of 2023.

This new rate will apply to all goods and services that are currently subject to the 10% VAT rate.

International VAT Rate Round Up: April 2023

If you missed out on April’s VAT rate announcements of VAT threshold changes, you can catch up now.

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