International VAT Rate Round Up: September 2024

The September edition of our International VAT Rate Round Up highlights the latest updates from Columbia, Denmark, Estonia, India, Latvia, and Malaysia.

Colombia

The Minister of Commerce confirmed they are considering the proposal to reduce VAT rates on hotel, tourist services and air tickets from 19% to 5%.

Denmark

Public consultation has opened on a draft legislative proposal to implement zero VAT rate for domestic air passenger transport.

Currently, domestic airlines are at a disadvantage when compared with to international carriers because they cannot deduct VAT on goods and services related to domestic flights.

The budgetary effects of a zero VAT rate for domestic air travel has been estimated to result in an annual revenue loss of almost DKK 15 million.

Estonia

The 9% reduced VAT rate on accommodation will increase to 13% from 1 January 2025.

India

The government has implemented a uniform IGST rate of 5% percent on all aircraft and aircraft engine parts from 15 July 2024.

Civil Aviation Minister has said that varying GST rates of 5%, 12%, 18% and 28% on aircraft components previously created challenges, including an inverted duty structure and GST accumulation in Maintenance, Repair, and Overhaul (MRO) accounts. He said the new policy will eliminate these disparities, simplify the tax structure, and foster growth in the MRO sector.

Previously in July 2022, in 16 States, the GST rate on aviation fuel has been reduced from 18% to 5% for Maintenance, Repair and Overhaul (MRO) services.

Latvia

The Minister of Finance proposed a potential increase of the standard VAT rate from 21% to 22%.

This potential increase was not welcome by the President and the Confederation of Latvian Employers.

Malaysia

The OECD has recommended that Malaysia reintroduce GST at a low rate to generate additional revenue to help Malaysia in the short term to achieve its 3% deficit target and in the long term to finance future spending needs.

Malaysia replaced the previous sales and services tax regime in April 2015 and initially introduced a GST rate of 6% in April 2015.

GST was abolished in June 2018 and the government reinstated the sales and services tax regime in Malaysia and this has a considerably smaller tax base.

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International VAT Rate Round Up: August 2024

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