Many businesses are being significantly impacted by Covid-19. Due to the largest work-from-home initiatives in human history, international travel bans and a significant decrease in in-store consumerism, businesses of all sizes are looking for ways to protect their finances and see themselves through these uncertain times. As a result, the general public and companies have had to think smarter, work more innovatively, and adapt to change more rapidly.
From a VAT perspective, almost all governments belonging to countries where the Coronavirus is causing self-quarantine and lock-down situations have implemented tax cuts and VAT payment deferments. Their intention is to relieve the stress off businesses and the public – a gesture that will be most welcomed by SMEs. To keep up to date on VAT regulation changes from COVID-19 response measures, VAT IT is continuously updating its blog and LinkedIn with the most recent information.
VAT on Events, Conferences and Tradeshows
The outbreak of coronavirus has resulted in a colossal number of events being cancelled, from sporting events to major B2B conferences and tradeshows. As a result, companies have had to cancel their stands or opt as no-shows at events. However, it is possible that a company will still incur VAT on an event if you had already paid upfront for it. Your trade show organiser should refund you in full, but in the event where a refund is not possible, you are eligible to VAT reclaim. This tax is either recoverable directly from the supplier or from the VAT authority. If you have incurred VAT on a non-refundable hotel booking associated with an event or trade show, you should be able to reclaim the VAT as well.
Domestic VAT: Tax Payment Deferments
The EU Commission has suggested countries provide Covid-19 Value-Added Tax payment holidays and act in unison. As a result, many tax authorities are stepping up to the plate to help struggling businesses in this time of crisis. Tax authorities are providing a deferment of tax payments until the epidemic clears. Most EU member states have implemented some kind of Covid-19 VAT payment deferment for several months. Other countries that have implemented include Colombia, Australia, Japan, Israel, Jersey, Costa Rica, Canada, United Kingdom, Vietnam, South Korea, USA, India and Thailand with many countries to follow suit soon.
The Removal of VAT on Hotels & Accommodation
Some countries are assisting tourism industries by offering Covid-19 VAT cuts on hotels and accommodation. Malta, Malaysia and Indonesia removed the Value-Added Tax levy on their hotel and accommodation costs. Although this gesture is well-intentioned, it may be futile due to international travel bans crippling the tourism industry.
VAT Rate Decreases
Some countries are easing the stress of the situation by cutting tax rates on certain goods and services. For example, in Norway, VAT on public transport, cinema, sporting and cultural events will be decreased from 12% to 8%. China has cut tax rates on medical services, medical necessities like masks and protective clothing, catering, accommodation and public transport. Jamaica has plans to cut its general consumption tax from 16.5% to 15%.
Understanding Retroactive VAT
VAT reclaim works on a retroactive basis. For example, you could claim back the VAT incurred in your foreign T&E and A/P expenses in European countries dating back to January 2019. Some countries, such as Australia and the Netherlands, even allow VAT reclaim from expenses incurred in the past four years, making the opportunity even more attractive. Many countries are now extending submission deadlines to September this year as a response to COVID-19; our blog will be continuously updated with VAT-related news. Additionally, our international VAT Rates guide is a free resource for you to explore opportunities available.
VAT Reclaim as a Liquidity Booster in Times of Economic Crises
Claiming VAT on past expenses is a reliable way to improve your business’s cash position in any economic situation. VAT is already present on all your business’s invoices, so if you’re not reclaiming it, money would be left on the table. VAT IT has been the biggest global player in the VAT reclaim industry for 20 years, which has given us visibility into how tax recovery has helped our clients tremendously during past economic downturns, such as back in 2008. If you have yet to explore your company’s VAT reclaim potential, perhaps there is no better time than now.
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A Fully Digital Partnership
VAT IT & Rydoo’s partnership represents the epitome of tax reclaim automation. VAT IT’s technology, Value-Added Tax Cloud, integrates with Rydoo to pull the expense data; using OCR on the data and the invoice images, VAT IT ensures compliance and prepares claims to tax authorities. VAT IT’s account managers, many of whom are chartered accountants, use business intelligence tools developed by machine learning to proactively identify missed reclaim opportunities that can be maximised. And because Rydoo and VAT IT have gone digital, we can still provide the full range of services while working from home during social isolation.
How to Start the VAT Reclaim Process
VAT IT’s driving mission is to help businesses find cash opportunities through indirect tax reclaim, and streamline the otherwise-complex process. We encourage all businesses looking for ways to bolster their cash flows over the next few months to enquire about VAT reclaim. Your Rydoo Customer Success Manager will be able to assist you with getting in touch with VAT IT, and the VAT reclaim process can be started directly from the Rydoo platform. What’s even better? VAT IT’s fees are only charged once we successfully get you your VAT refund.