15% VAT Increase for Vanuatu

The Government of Vanuatu has officially advised that the Value Added Tax (VAT) rate will increase from 12.5 per cent to 15 per cent from today. This change comes as a result of the recent amendment to the Value Added Tax legislation by Parliament.

The change has already been gazetted in the Government’s Official Gazette on December 22, 2017.

The VAT Office has instructed all retailers to put up a notice between today and January 21 in their shops to let customers know that an adjustment may be made at the till (cash register) to account for VAT at the new rate.

“The simplest way to increase your VAT inclusive prices to reflect the increase (2.5 per cent) in the VAT rate to 15 per cent, just multiply your old price by 115/112.5,” the VAT office instructed retail owners. In another statement to business houses, the VAT office has advised in a summary of how the rate change will impact business. “Businesses registered for VAT on a payments basis; Payments received or made on or after January 1, 2018 for invoices issued on or after 1 January 2018 will attract the new rate of 15 per cent,” it stated. “Payments received or made for invoices issued before 1 January 2018 will remain at 12.5 per cent.

“However an adjustment will be required on the VAT return to correctly account for it.

“Details are in the Transitional Guide released by the VAT Office which can be downloaded.

“For Businesses registered for VAT on an invoice basis;If the invoice was issued before January 1, 2018, the old rate of 12.5 per cent applies (and will be included in that period’s VAT return).”

If the invoice is issued after January 1, 2018, the new rate of 15 per cent applies.

The statement reiterated that clients are reminded that the next two VAT returns that are due on January 5 and January 27 2018 relate to the period’s November and December 2017 respectively, and therefore the old rate of 12.5 per cent still applies when calculating VAT payable/refundable.

“Businesses utilising computerised accounting systems such as Xero, MYOB, Quickbooks, Opera, RoomMaster, etc. will need to manually update the tax rate in these systems on Monday 1, January, 2018 to ensure that the correct VAT rate is charged.”