Many countries are introducing (temporary) reduced VAT rates for specific products due to the Covid-19 pandemic. A recent example is Germany, where the standard VAT rate is changed from 19 to 16% as of 1 July 2020. This change was announced on 3 June 2020. Even though (or perhaps: because) many changes are temporarily, leadtimes for adopting systems are often very short, e.g. a couple of days or weeks.
This means that your business and IT systems must be able to adopt the changes fast and efficiently. Obviously, all transactions and the VAT Returns which are automatically prepared are hugely impacted.
BE PREPARED. Attached is a selective overview of considerations on VAT rate changes. This list is not complete but may give you a good idea to start the journey of a VAT rate change in your organisation. Many stakeholders as Purchasing, Accounts Payable, Accounts Receivable, Product Supply, IT, etc will need to be involved.
A VAT rate change, even more if temporarily, is disrupting the business and comes with a huge cost for implementation, Wrong reporting by application of wrong VAT rates may lead to adjustments upon audit. You may wish for a pragmatic approach by tax authorities, but as a business it it your responsibility to ensure that the correct VAT rate is applied to all your transactions.
Source www.vatupdate.com
