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Coronavirus Concerns for VAT Practitioners

March 27, 2020

Germany Covid 19 VAT
Photographer: Jacobia Dahm/Bloomberg

The global spread of coronavirus disrupts markets and businesses, raising urgent questions for your value-added tax function. Remote workers urgently require timely information about coronavirus-related VAT relief, compliance deadlines, refunds, credits, and debt forgiveness.

Here’s what is top of mind for VAT practitioners.

Could a VAT refund offer possible savings in a downturn?

In a downturn, every savings counts. If your purchase (input) VAT exceeds your sales (output) VAT, you are often eligible for a refund of the difference or can offset VAT credits against other taxes. This may be of particular interest in hard-hit sectors, such as hospitality and retail. Some countries are opting to expand refunds. For example, China announced on March 11 the availability of VAT refunds for R&D-related domestic purchases.

Webinar: Coronavirus Impact on International Tax Compliance

Learn about the how the effects of Covid-19 and the measures to mitigate them could affect your business or your clients’ businesses.

Can a company recover VAT on bad debts?

Caught out by the financial storms, are your clients unable to pay their outstanding invoices? If you are out of pocket for the VAT paid in connection with those sales, you may wish to consider a VAT bad debt deduction. Governments have been easing their bad debt recovery rules over the past few years to enable companies to recover VAT on bad debts.

[Keep up with the latest international tax developments with Daily Tax Report: International.]

Should I deregister for VAT?

Suspending operations of foreign offices and subsidiaries can enable a business to survive troubled times. By deregistering, you can terminate your reporting obligations and limit liability.

Where do I find reliable, up-to-date VAT information for remote workers?

With most employees working remotely, and a clampdown on business travel, can your team access up-to-date VAT information for all the countries in which you operate? Can they access the VAT legislation, forms, and tax authority websites they need? Are they briefed on coronavirus-related VAT reliefs and postponed reporting deadlines?

[Subscribers: Access the full Value Added Tax Navigator now.]

Bloomberg Tax’s VAT Navigator provides detailed analysis of the VAT rules in nearly 180+ jurisdictions as well as a chart builder tool that allows you to compare countries and create bespoke reports with a few clicks.


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