As a result of global economic developments a number of VAT changes went into effect this and past month including the following.
In an effort to reduce the overhead costs and become more competitive in the Caribbean tourism sector effective October 1, 2013 the VAT rate on accommodations decreased from 8.75% to 7.5%. In addition to the new VAT rate direct tourism services are being brought in line with the accommodation counterparts from 17.5% to 7.5%.
Following long debates resulting in government’s crisis the standard VAT rate increased from 21% to 22% effective October 1st, 2013. A decree postponing the increase to January 1st, 2014 failed to be passed in the Council of Ministers meeting on September 27th. The aim behind the hike is meeting the Euro currency 3% GDP deficit target.
Effective September 2nd the new VAT Act 2013 came into force. As a result many basic commodities like milk, bread, newspapers and other goods are no longer exempt and subject to the standard 16% rate. In addition, the reduced 12% rate for electricity was repealed. The controversial VAT amendment aimed at generating revenue for the nation’s development agenda. As the changes had a big impact on the overall costs of living, the Finance Committee of the National Assembly is set to audit the implementation of the VAT Act. In consequence an amendment bill may be assessed.