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Indirect tax updates: April 2023 news, views and changes

A new financial year is upon us and that means one thing: A wave of fresh rates, rules and regulations for indirect tax teams around the world to understand and implement.

Here is our round-up to some of the most notable VAT and GST changes announced so far this month:

Belgium: The existing reduced rate of 12% and the super reduced rate of 6% will be combined to form a new VAT rate of 9% from 1st January 2024.

Portugal: A temporary VAT rate of 0% has been applied to essential food products and will be in use from April to October.

USA: The state of South Dakota has cut its Sales Tax rate from 4.5% to 4.2%. The new rate will be in place for four years from 1st July 2023 to 30th June 2027.

Ukraine: A report by Hetmantsev has declared the reduction of VAT on fuel to 7% was a mistake and it will be returned to its previous level of 20% from July.

Italy: A ruling has been passed by the Italian Cabinet that will temporarily halve VAT on purchases of natural gas to help businesses deal with rising prices in the energy market.

Botswana: The temporary reduced rate of VAT of 12% has now expired and the previous rate of 14% is now in use once more.

Kenya: President William Ruto has stated the country will end its 1.5% Digital Services Tax.

Indonesia: VAT on electric vehicles has been lowered to just 1%, down from its previous rate of 11%. It will apply to battery-based vehicles and is designed to encourage a larger take-up of electric cars.

Slovakia: A reduced VAT rate of 10% has been introduced for the tourism and catering industries.

Israel: Government plans to introduce VAT at 17% on sales of e-services to consumers by non-resident businesses have been revealed.

Azerbaijan: A raft of products relating to media work have been made exempt from VAT. They include performance of work and services directly related to media activities to media entities that do not have a permanent office in Azerbaijan.

Germany: The federal government has applied a reduced rate of VAT on gas and electricity sold between 1st October 2022 and 31st March 2024.

Kazakhstan: New legislation has been passed that will see businesses with fewer than 200 employees pay a new special retail tax based on turnover instead of VAT.

Monaco: Monaco’s reduced rate of VAT has been extended to cover green improvements to buildings and electric vehicle charging infrastructure.

Poland: The current zero-rating of many food items in Poland is likely to be extended to 1st January 2024. The temporary rate is presently due to come to an end on 30th June 2023.

India: The Ministry of Finance is currently considering a proposal to increase GST for hotels and restaurants from 5% to 12%, with input tax credits available.

Turkey: The VAT on deliveries of prefabricated buildings will be 1% until 31st December 2023.

Bulgaria: A plethora of tax changes are looming in Bulgaria, including the ending of a temporary reduction in VAT on catering and restaurant services. The cut to 9% was originally introduced in July 2020 and is due to expire on 31st December 2023.

Nigeria: Zainab Ahmed, Nigeria’s Minister of Finance, Budget and National Planning, has urged the new government to increase VAT from 7.5% to 10% to stimulate growth.