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Italy mulls VAT rate cut

  • Jun 17, 2020 | Richard Asquith

Italian ministers have been raising the prospect of a cut to the standard Value Added Tax rate, currently 22%. This would follow the example of Germany, which has announced a VAT rate cut to 16% from July until the end of 2020.

An Italian deputy finance minister, Laura Castelli, has been quoted as saying that any VAT rate cut could be tied to electronic payment methods to help cut VAT fraud. Italy has the largest VAT Gap – the deficit between forecast and actual VAT revenues – in Europe. This could include using credit cards in stores to qualify for a % cut in the VAT element of the purchase – and increasingly popular incentive in South America and Africa.

Italy recently ruled out a scheduled VAT rate rise to 25% at the end of 2020 due to the COVID-19 crisis. This increase was pencilled in last year as a fiscal measure should the government fail to hit its € currency deficit targets.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara
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