- The government proposes converting selected zero-rated items to VAT-exempt status, while keeping zero-rating for certain essential goods.
- The change is intended to reduce VAT refund claims and improve VAT administration.
- It may increase prices, because businesses would no longer be able to recover input VAT on costs linked to exempt goods.
- Businesses making both taxable and exempt supplies may face more complex VAT returns due to input VAT apportionment and proration.
- The overall impact will depend on which items are ultimately made VAT-exempt.
Source: ey.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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