The rate of VAT is increased from 15% to 17% for supplies of goods and provision of services from 1 March 2012. This amendment affects goods and services, which are currently taxed under 15% for VAT purposes; goods and services currently being taxed under other reduced VAT rates (5% and 8%) or are exempted from VAT are not affected.

The transitional provisions of the article 55 of the VAT Law clarify whether a transaction will be taxed with the existing rate (up to 29th of February 2012) or amended VAT rate in cases where that selection is not clear.

Delivery of goods before 1 March 2012

If the delivery/transportation of goods takes place before 1 March 2012 the issuer of the invoice has the option to charge 15% VAT, even if the invoice is issued at a later date.

Partial prepayment receipt before 1 March 2012 and delivery of goods or/and issuance of invoice after 1 March 2012

The issuer of the invoice has the option to charge 15% VAT only for the prepayment portion.

Issuance of invoice and full repayment before 1 March 2012 and delivery of goods after 1 March 2012

If the issuance of the invoice and/or full repayment takes place before 1 March 2012 and the goods were delivered after 1 March 2012 the issuer of the invoice needs to charge 15% VAT.
In the case of the provision of services, which cannot be allocated (see below) into the pre-amendment and post-amendment periods, then this provision is applicable.

Provision of services
In the case the provision of services part of which is provided before 1 March 2012 and part provided post 1 March 2012, there is an option to charge 15% VAT only for the part of services provided before the date of the VAT rate amendment.
The allocation can be performed either with the percentage of completion method or according to the providers costing or invoicing system.

Law services and services related to the construction industry
The VAT rate to be charged is the one in effect at the day of the creation of taxable point according to the special provisions applied for the above services.

Other duties and responsibilities due to the VAT rate amendment

•  Stock taking of the goods affected by the VAT amended rate at 29 February 2012
• For the construction industry, stock taking/estimation of the percentage of completion as at 29 February 2012, which will be taxed at 15%.