The July Stimulus Plan announced by the Government last week is the next stage in Ireland’s response to the COVID-19 crisis and will help ensure Ireland’s businesses get back on their feet and as many people as possible can return to work as and when it is safe to do so.
There are a number of points, which will be relevant to you, over the coming months.
Temporary reduction in the standard rate of VAT
The standard rate of VAT will decrease from 23% to 21% for the period 1 September 2020 to 28 February 2021.
- If you issue invoices to customers in this period using the standard VAT rate, it is important to ensure that you are charging the new 21% rate on same
- If you or your staff are operating an accounting system in-house please arrange to set up 3 new VAT rates:
- Standard rate (2) sales of goods/services 21%
- Standard rate (2) purchases of resale goods/services 21%
- Standard rate (2) purchases of non-resale goods/services 21%
If you are purchasing goods or services from the EU or purchasing services from outside the EU then you will also need to ensure that your system is set up correctly for the reverse VAT charge
- Standard rate (2) purchases of services from outside EU 21% (reverse charge VAT)
If you use an EPOS (Till) system or E-Commerce site, you may need to liaise with the providers of these systems to ensure that the VAT rate is updated to 21% from 1st of September also.
You should also review all supplier invoices received in the period from 1st September to 28th February 2021 to ensure that your suppliers are operating the correct rate of VAT to avoid any overpayment to them.
Legislative basis for the warehousing of tax liabilities
This will allow for businesses affected by Covid-19 to delay payment of their PAYE and VAT debts in part or in full for a set period with no interest or penalties (announced in May and currently being operated by Revenue Commissioners pending legislation).
Reduction in the interest rate applying to agreed repayments of all tax debt
All taxpayers (sole traders and businesses) that have declared but have not paid their tax debts can avail of a reduced interest rate of 3% provided they contact Revenue to agree payment of these debts or have entered into an agreement to pay these debts on or before 30 September 2020.
Should you wish to discuss any of these points and the relevance it may have to your business, please do not hesitate to contact our Accounting Solutions team and we will discuss the best way for you and your business to approach these changes.