Vat increase how long

In particular, the targeted VAT rate reduction from You should consider how the change will impact your business and any actions you need to take between now and 1 March to ensure that you are ready for the change.

What steps are required to update your systems for the VAT rate change? How should the VAT rate increase be factored into your pricing? This is particularly relevant for businesses who set their prices on a VAT inclusive basis such as retailers, and will likely depend on how the temporary VAT rate cut was factored into pricing from 1 September Working out the tax point of particular supplies can be complex but will take on increased importance.

Relevant factors can include whether the supply is a discrete transaction or a continuous supply, the time that the payment is made, and whether you are selling to a consumer or another business. In addition, you will need to ensure that your system is capable of capturing the higher rate of VAT for any reverse charge VAT due on purchases from 1 March Simultaneously, Saudi Arabia purchased shares in different companies abroad via its Public Investment Fund, signaling that it is looking for methods not only to recover but to also benefit from the global downturn.

Whether such investments will have a positive return remains to be seen. The country also seems adamant on providing the private sector with some support to alleviate the pain of the current crises; it announced a stimulus package as the coronavirus crisis hit. Saudi Arabia also saw an opportunity in the global ban on travel. Part of its plan to diversify the economy is to develop local tourist destinations and encourage citizens to spend more on leisure domestically.

Prior to the crisis, attending domestic entertainment events such as concerts and festivals was arguably unaffordable to many. Once international travel resumes, the VAT increase and added taxes will put Saudi Arabia at a disadvantage. Following the new fiscal adjustment, many families will be left with less disposable income to spend on recreation and leisure. The standard rate of VAT increased from The aim of the cut was to boost consumer spending with retailers expected to pass the reduction on to customers.

At the time, opinion was divided about the policy with then Conservative leader David Cameron calling it an "unbelievable and expensive failure". The Institute for Fiscal Studies was more supportive. Measuring the overall impact proved challenging, because no-one could know what would have happened without the rate cut. Many companies are expected to use the windfall to shore up finances hit by the lockdown, rather than cut prices. For example, Malcolm Bell, chief executive of Visit Britain, said the chancellor's move was to support business, not help holidaymakers.

However, it is also proposed that from 1 April , only brown bread and whole wheat brown bread will be zero rated, whereas rye or low GI bread will become subject to the new standard rate from that date. The VAT rate increase was motivated as being necessary to meet spending commitments and to prevent further erosion of public finances.

The VAT rate increase was preferred over an increase in personal income tax PIT and an increase in the corporate tax rate. A concern was raised that an increase in PIT would constrain growth and investment, and that companies may respond to a corporate tax rate increase by raising prices, lowering wages or retrenching workers. The DTC found that multiple VAT rates add significantly to the complexity of the VAT system, and pointed out that a number of so-called luxury goods, including motor vehicles, cell phones, perfume and photographic equipment already bear an ad valorum excise charge, upon which VAT is again levied.

These ad valorum duties are also increased with effect from 1 April