The Isle of Man government has issued a reminder confirming that the standard value-added tax (VAT) rate will increase to 17.5% with effect from January 1, 2010, in line with the UK.
The VAT rate cut to 15% entered into force on December 1, 2008, but was always considered as a temporary measure to buoy consumer consumption during the recession.
According to the Isle of Man government, special arrangements have been put in place to ease the administrative burden of those who will trade through New Year's Eve into New Year's Day, such as bars and telecoms businesses – again in line with the UK; for these businesses, the VAT rate will revert to 17.5% after 6:00 am on January 1. For most registered businesses, however, the increased standard rate will be effective after midnight of December 31, 2009.
The Collector of Isle of Man Customs, Denis Maxwell, said: "We are putting this message out now to ensure that businesses have time to organize their affairs to cope with the change."
Treasury Minister Alan Bell added: "It is our understanding that the rate will revert, but we will be keeping a close eye on the Chancellor's pre-budget statement, which he will make on December 9, 2009, just in case there are any further changes for VAT."
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