From an indirect tax point of view measures include:
- Reduction of the general VAT rate from 19% to 18% in 2019, and to 17% in 2022 and onwards. The bill would eliminate the 5% VAT rate applicable to certain products and services
- Removal of many of the VAT exclusions and exemptions but continuance of the exclusion for certain activities, such as health services, medicines, education, transportation, financial services, utilities, and residential rents
- Continuance of the requirement for taxpayers to register and collect the tax for remote services providers. The bill would, however, allow foreign service providers of electronic services or digital content to voluntarily opt into a VAT withholding tax collection system through debit and credit card issuers
- Introduction of a VAT refund mechanism for low-income families
- To allow VAT paid on the acquisition or construction of fixed assets to be taken as a credit against income tax due
- For small businesses (those with gross income below 80,000 tax units per year – approximately US$850k), the bill would establish a small business tax that would replace income tax, VAT and general excise tax
Source: EY
