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25 September 2015

VAT decreasing to 17%

The decrease in the rate of VAT (from 18% to 17%) is coming into effect on 1 October 2015. Prices need to be updated at that time.

How does this affect a business' reporting requirements?

With regards to expenses, ensure that you take the VAT as shown on the tax invoice (חשבונית מס) - there are some situations whereby a single invoice will have both the lower and higher rates of VAT charged. The most likely examples are your electric and telephone bills.

Onto income reporting.

For those businesses reporting on a monthly basis, nothing really changes as your income for the month of October will all be charged at the lower rate.

However, for those reporting every two months, the rate change comes in the very middle of the period, and so you will be reporting income charged at differing rates. The VAT authorities will not be able to do a proper check of your calculations, other than to check that the average rate falls out somewhere between 17% and 18%. From the actual average percentage they can work out (subject to rounding differences) the split between income charged at 17% and that charged at 18%. If you file online, you will be able to split out the income chargeable at each rate.

Overall, the change is not too difficult to handle, but if in doubt, contact me today.

1 comment:

  1. I am a tax professional. I have written many articles in my http://knowledgiate.com from time to time. Yes! Decreased VAT will help companies upto products are actually sold out.

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