Worldwide major VAT changes coming into force
8 January 2014
Head of Tax Richard Asquith gives a summary of the major VAT changes taking place across the world this month.
Azores (Portugal), 1 January
The standard VAT rate was raised from 16% to 18%.
Corsica (France), 1 January
The standard VAT rate was raised from 8% to 10%.
Croatia, 1 January
The reduced VAT rate rose from 10% to 13%.
Cyprus, 13 January
The standard VAT rate to rise from 18% to 19%; this is part of a two stage increase from 17% following the severe financial crisis in Cyprus. The reduced VAT rate is also rising from 8% to 9%.
France, 1 January
The standard VAT rate increased from 19.6% to 20%. The reduced VAT rate of 7% rose to 10%. The planned cut in the other reduced rate from 5.5% to 5% was blocked by the constitutional court.
Ghana, 1 January
The standard VAT rate rose from 12.5% to 15%.
Mexico, 1 January
VAT rate increased on US border areas from 11% to 16%.
Serbia, 1 January
The reduced VAT rate rose from 8% to 10%.
Says Richard Asquith: “It is tempting to imagine we are through the worst of the austerity VAT rises following five years of repeated increases as governments have sought to shore up their faltering revenues and widening deficits. But a number of countries will remain vulnerable to the need for fund cuts to labour taxes to help boost their international competitiveness. For instance France - despite its recent VAT rise - remains almost 2% behind the EU VAT rate average. Historically it has been at least 1% above.
There will be more rises in Asia Pacific as the countries there become more reliant on indirect taxes. In 2014 Japan will start a two-stage doubling of its 5% Consumption Tax to 10% to help fund an ageing population.”