Tax Update – Standard VAT rate increase & COVID-19 Business Aid Scheme (CBAS)
VAT Rate Update
The Minister for Finance Paschal Donohoe has recently announced that the standard rate of VAT will revert to 23% on 1st March 2021, from the temporary 21% rate introduced as part of the July stimulus package. There are a number of administrative points to consider and businesses should ensure their systems are updated to reflect the change.
This VAT rate change will not impact all supplies. For example, the VAT rate reduction from 13.5% to 9% for certain goods and services, mainly in the tourism and hospitality sectors, will continue to apply until 31 December 2021.
Where a credit note or debit note is issued to a consumer on or after 01 March 2021, the rate of VAT should be the same as that shown on the original invoice to which it relates (the rate in place when original supply was made).
If the goods or services are supplied on or after 1 March 2021, any advance payments, including deposits, received from VAT-registered persons can be categorised as follows:
Where a contract has been entered into at the time the 21% VAT rate applies, and the contract is not completed before 1 March 2021 an adjustment to account for the increase in the VAT rate may be necessary in the absence of an alternative agreement between the parties.
If you require assistance with any aspect of the above change, please contact a member of the PKF team.
COVID-19 Business Aid Scheme (CBAS)
The Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar TD has announced €160m for measures to help businesses during the pandemic, including a new €60 million COVID-19 Business Aid Scheme (CBAS) which is being developed to provide grants to businesses ineligible for the Government’s other existing schemes that are designed to help with fixed costs. E.g. some businesses that aren’t eligible for existing grants, largely due to the fact that the premises they operate from have not been closed to the public -, wholesalers, suppliers, caterers, office-based businesses down 75% or more in turnover may qualify.