As of the 1st of March 2012, the standard rate of VAT is increased, from 15% to 17%. Thus all goods or services supplied after this date will be subject to the new rate. The reduced rates of 5% and 8% remain the same.
Time of supply
It is important to establish the tax point as this will determine the rate of VAT to be applied.
The tax point of the supply at which VAT is levied is:
- the time that the goods are removed of the services are completed, or
- if an invoice is issued within 14 days from the removal of the goods or the completion of the services, then the date of the invoice is the tax point, or
- if payment is received or an invoice is issued prior to the removal of the goods or the supply of the services is completed, then the tax point is the date of payment or the date of the invoice.
Special rules apply when there is a change in the rate of VAT.
The taxable person may ignore the second point above in the case where the goods are removed before the 1st of March 2012 and the invoice is issued after the 1st of March 2012.
Therefore, the taxable person may ignore the date of the invoice and charge VAT at the rate applicable when the goods are removed i.e. 15%.
In other words, the taxable person can charge VAT at 15% if any of the following events occur before the 1st of March 2012:
- the goods are removed, or
- payment is received, or
- invoice is issued
The same rules apply to the provision of services.
Finally, it is necessary to show on the invoice the tax point where this is different from the date of invoice as this would justify why VAT has been charged at 15% instead of 17%.
In accordancfe to the Commissioner’s Notification, issued under Regulation 22 of The VAT (General) Regulations of 2000 until 2011 (Regulation 259/2004), the taxable persons who are effected from the change of the standard VAT rate, ought after the completion of their business operations, the date before the day on which the increase of the VAT comes into force, to conduct a stock taking, which includes quantitative counting and valuation. The taxable persons ought to keep the stock taking records for a seven-year period.