On 26 January 2022, the President signed a law (the “New Law”) to amend the Goods and Services Tax Act as part of what is called Anti-Inflation Shield 2.0 (“Shield 2.0”). The main purpose of the New Law is to temporarily reduce VAT rates on certain goods as a way to supress the growing inflation.
The following rates will apply from 1 February 2022 to 31 July 2022:
- 0% for food and beverages now subject to the rate of 5%, as well as for natural gas and fertilizers, plant protection chemicals, garden soil and other goods facilitating agricultural production;
- 5% for electricity and heat;
- 8% for motor gasolines, motor oils, biocomponents which in themselves are used as fuel, and gas for combustion engines.
In addition, the New Law prescribes that the lower VAT rates must be disclosed to consumers, including through the exhibition of relevant notes near VAT cash registers or in invoices.
That same day, 26 January 2022, saw publication on Finance Ministry’s website of a communique regarding changes to regulations on VAT cash registers and Binding Rate Information (WIS) rulings. In accordance with the communique, as of 1 February 2022:
- any taxable persons selling retail goods for which VAT rates are reduced under Shield 2.0 and using VAT cash registers for such sales shall be required to change the rate settings in their registers as of 1 February;
- all WIS rulings for goods for which VAT rates are reduced under Shield 2.0 shall expire. However, the VAT changes under Shield 2.0 will not affect the classification of goods for which WIS rulings have been issued pursuant to the combined nomenclature.
If these issues pertain to your business and you are interested in our assistance, please contact us.
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