VAT rate increase from 15% to 18%

As a result of one of the measures announced in the Budget 2003, the VAT rate of 15% shall increase to 18% with effect from 1 January 2004.

This will require certain changes to the fiscal equipment used by many business operators. The VAT Department has issued the following notice for all Business Operators:

The VAT Department reminds all Business Operators in possession of a Fiscal Cash Register or a Fiscal Device (computerized system) that from 1 January 2004 the current VAT rate of 15% will change to the new rate of 18%.

Business Operators are urged to make arrangements to have such fiscal cash registers and other fiscal devices adjusted by cash register suppliers or sioftware contractors from whom the equipment had been purchased.

The Department is allowing up to 16 January 2004 for business operators to alter their devices to reflect the 18% VAT rate. At the same time, the reduced rate button of 5% should be activated for use with effect from 1 May 2004 where necessary. Business Operators who use such devices are alos required to forward their log book to their respective suppliers and to ensure that suppliers sign and stamp the log books certifying that the changes have in fact been made.

In the meantime, prices should be adjusted by the 31 December 2003 to reflect the new 18% VAT rate. Until fiscal cash registers or fiscal devices are modified, within the allowed period of time, business operators are required to do the following:

1. Ensure that the new price, which should include the 18% VAT is ounched even though the machine is not yet adjusted;
2. Adjust the total amount of sales reported by their system by multiplying the total sales, inclusive of VAT, by 0.1525. This will automatically establish the 18% VAT element on such sales.

The Department appreciates the co-operation of Business Operators and urges them to follow these instructions to ensure a smooth changeover.

Fees to be charged for cash register adjustments

An agreement has been reached between the government and the suppliers of cash registers on the maximum fees that can be charged for making the necessary adjustments to the fiscal cash registers due to the new VAT rate.

A maximum of Lm12 (inclusive of VAT) is to be charged if the cash register is taken to the premises of the supplier.

A maximum of Lm18 (inclusive of VAT) is to be charged if the adjustment is made at the trader’s business location.

Apart from the adjustment of the new VAT rate of 18%, suppliers are also being requested to activate the reduced rate of 5% which will come into effect on May 1, 2004.

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