| Update: | Compliance Alert - Reduced VAT rate of 12% on certain services |
| Date: | 2023-10-19 |
Legal Notice 231/2023 was published in the Government Gazette, adding new services to the list within the Eighth Schedule of the Value Added Tax Law (VAT Law) that will be taxed at a rate lower than 18%.
The Legal Notice transposes directives that oblige Member States wishing to apply reduced rates of no less than 12% on certain transactions to publish detailed rules governing them by 7 October 2023.
The Eighth Schedule to the VAT Act specifies the tax rate for specific supplies or imports that qualify for a reduction from the standard tax rate of 18%. In this new Legal Notice, the following four new types of services to be taxed at a rate of 12% are listed:
- Custody and management of securities;
- Management of credit and credit guarantees by a person or body other than those who grant the credit;
- Hiring of a pleasure boat provided that it is not rented for a period exceeding five weeks when adding up the time spent on rentals during the previous twelve months;
- Human body care services required to be delivered by a person in the exercise of any profession regulated by the Health Care Professions Act (Cap. 464), including services supplied in the course of a health studio business or similar business, but not including exempt supplies referred to in item 11 of Part Two of the Fifth Schedule.
The new 12% VAT rate shall come into effect beginning 1 January 2024.