This change is one of the biggest demands of the business community, given that the advance payment to the public treasury of the accrued and uncollected VAT is one of the main telegram korean list problems that any company has from the first moment it begins its activity. How will the cash VAT work in companies?
Symmetrical criterion for VAT collected and paid, first requirement for cash VAT
As the Vice President announced in the Council of Ministers, the first requirement for applying the VAT on a cash basis is the symmetry in the calculation of the amount to be paid . This symmetry in the liquidation is achieved by applying the cash criterion for the VAT incurred and for the VAT accrued.
That is, companies that adhere to the cash VAT system will calculate their VAT tax rates using the difference between the VAT collected and the VAT actually paid . This change is logical, given that we cannot apply the accrual criterion in VAT for the supported rates and apply the cash criterion for the accrued rates.
Voluntary enrollment in this system, but with more administrative burdens
As was also announced in the Council of Ministers, subscribing to the cash VAT system will be voluntary for companies that are currently in the general VAT regime (modules and other special VAT regimes are excluded) and all companies that subscribe to this new calculation format will have to maintain greater control in their management and business administration.
Please note that with this change, it will be essential for companies that do not keep formal accounting, all self-employed workers, to demonstrate to the Tax Agency the collection and payment dates of all VAT quotas that they have recorded in their tax returns on a quarterly basis.
On the other hand, it is essential to make the appropriate changes to our management software, since we will have to differentiate in the VAT quotas those that have been accrued and paid or collected from those that are pending payment.
In any case, since it is a symmetrical change in the calculation of the VAT rate, I really doubt that companies will benefit from this change and we will have to wait for the final wording of the VAT Law, the regulations of said law and the hypothetical changes that are introduced in the invoicing regulations based on this tax change.