The president signed an act which assumes maintaining the increased rates of tax on goods and services (VAT) at the level of 8% and 23% in 2023 due to the planned increase in defense spending and after January 1, 2024 in the event that defense spending exceed 3% of GDP, the Chancellery of the President informed.
The provision on maintaining increased VAT rates is included in the amendment to the Income Tax Act (CIT) and other acts, which also amends the VAT Act.
Amendments to the Value Added Tax Act consist in: […] extending the duration of increased tax rates of 23%, 8%, 7% and 4%, respectively, both for the year 2023 and for the period from On January 1, 2024, until the end of the year, in which the sum of expenses specified in the Law on the Defense of the Fatherland, specified for this year in the Budget Act and the financial plan of the Armed Forces Support Fund, is higher than 3% of the gross domestic product, it was announced.
The amendment provides for the continuation of the application of increased by 1 percentage point, VAT rates in 2023 due to the planned jump in defense spending.
The changes to the VAT Act introduced by this amendment provide for the introduction of a mechanism from 2024 on the basis of which the period of validity will be extended, increased by 1 percentage point. VAT rates. This mechanism is to be correlated with the level of expenditure allocated to financing defense needs (if it exceeds 3% of GDP, the mechanism will be maintained).
Increased by 1 percentage point, VAT rates are to be applied based on the new mechanism from 1 January 2024 until the end of the year in which the sum of defense expenditure precisely defined in the draft will be higher than 3% of the GDP.
Source: ISBnews
