Below are some of the main Value Added Tax amendments arising from Finance (no 2) Act 2013.
9% VAT Rate for Tourism and Hospitality Sectors
The 9% VAT rate is to continue to apply from 1st January 2014 as announced in the October Budget.
Transfer of Business
To simplify matters the transfer of business is now not a taxable supply.
The amendment in the Finance Act 2013 clarifies that where a business transfer takes place VAT deducted is only allowable on services directly related to the transfer of those goods that would be taxable but for the application of the business transfer rule.
Tax Deduction on Unpaid Consideration
Where a registered person or entity has taken a VAT deduction and has not paid the supplier of the goods or services within the next three taxable periods, the VAT to be deducted in the third period is reduced by the VAT on the unpaid amount. A future claim can be made when the amount is subsequently paid.
Prior Revenue approval is required for any variation of the above and the new legislation applies from 1st January 2014.
Threshold for Cash Received Basis of Accounting for VAT
The annual threshold for accounting for VAT on a Cash Received Basis is to increase to €2 million with effect from 1st May 2014.
Requirement to Furnish Information
The Finance Act 2013 provides a new section by which the Revenue Commissioners can serve a notice on an accountable person to provide additional information on their taxable supplies in a specific VAT period. Penalties will apply if the notice is not complied with.
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