VAT increase: Government backtracks

Fouzi Lekjaâ was at the helm of the Finance Committee on Friday November 10, as part of the debate on the Finance Bill. After sometimes heated discussions on a number of sensitive issues, a number of amendments were approved. These changes mainly concerned VAT.

They made it possible to grant an exemption, with the right to deduct, to households for sales and deliveries of water by organizations responsible for public distribution. The same applies to sanitation and water meter rental services, limited to water for domestic use.

At the same time, it was specified that the gradual harmonization of the VAT rate applied to water, from 7% to 10%, would henceforth apply to water intended for non-domestic use. The same applies to sanitation services provided by organizations in charge of this activity, and to the rental of water meters intended for these uses.

VAT on urban and road haulage has been reduced. Instead of the 20% initially planned, 10% has been opted for. The increase in the VAT rate from 14% to 20% will only apply to intercity passenger road transport, as is the case for rail transport. With regard to electricity, an amendment expressly states that the change in the VAT rate from 14% to 20% will have no impact on electricity sales tariffs, which are set, all taxes included, by the ministerial order of 2014, still in force.

In addition, the Finance Bill proposed to institute the principle of solidarity, in terms of VAT collection and payment, of any person directly or indirectly exercising functions of administration or management of the company. Such persons will thus be held jointly and severally liable for VAT collected but not paid to the Treasury. On this point, Fouzi Lekjaâ was categorical: the aim of this provision is not to weaken or terrorize anyone. On the contrary, the more a company’s business flourishes, the more it helps to safeguard the taxpayer’s money. Although the question of liability has not yet been settled, it will be discussed in the House of Councilors. In this case, some M.P.s  are invoking Article 98 of the Code for the Collection of Public Debts to avoid the controversial provision. However, this provision has been in place for almost 20 years and has not been a deterrent. Today, VAT is paid by citizens. Companies collect it as intermediaries and pay it to the Treasury. So if they keep it in their coffers, it’s perceived as theft. In other countries, this may lead to a jail sentence, recalls a specialist.

M.C.