We’re less than two hours away from ringing in 2019 in the Canary Islands but work is far from over. There are some important changes regarding the General I.G.I.C. (Impuesto General Indirecto Canario) Rate, the rate that affects the majority of businesses. Earlier today, the Canarian Government published Ley 7/2018, 28th December, General Canary Islands’ Budget 2019, which states the General I.G.I.C. Rate will be reduced from 7% to 6,5% for all delivery of goods or services that are not subject to other I.G.I.C. Rates from 1st January 2019.
20th April, 20th July, 20th October and 20th – 31st January… No, I haven’t gone mad! Many business owners tremble when these four dates are mentioned because it is when quarterly taxes are due and a portion of the income earned with blood, sweat and buckets of tears goes straight into the tax man’s pocket. The economy is well on its way to recover but there are still some sole-traders out there whose businesses continue to struggle and the thought of quarterly taxes or payment of their monthly Social Security contribution can send them into a panic.
One of the first things I advise new clients to my office is no matter how difficult it gets, they must always make sure to pay Social Security and the Tax Offices within established deadlines because failure to do so can set off a series of events that can snowball and leave the business owner with a mountain of ever increasing debt when late-payment interest is added on top of an existing debt. What can one do though if it is impossible to make payments on time?
We’re now three months into the new tax year and as usual, there is much work to do, taxes to file and legislation to plough through as we try to figure out what’s new in the business world in Spain. This time it is to do with IGIC (Impuesto General Indirecto Canario), the Canarian equivalent of VAT. Since we live on a small island in the middle of the Atlantic, we had to have some advantages, right? Well, one of those advantages is a reduced VAT rate so as opposed to countries on mainland Europe that may pay around 20% to 27%, in the Canaries, the general rate is 7%. Bear in mind, everything we have is imported so this is a massive deal!
Anyway, Law 7/2017, 27th December of the General Budget for the Canary Islands was approved and within it, new legislation that directly concerns business owners and their obligation to declare IGIC. Those sole-traders and professionals whose total volume of operations for the previous tax year did not exceed 30.000 euros (excluding IGIC), may be eligible to an IGIC exemption, meaning they would be excluded from this tax. If on the 1st January 2018, they find they meet the criteria, they must inform the Canarian Tax Office (Agencia Tributaria Canaria) of their wish to either be included or excluded in this special system before the 2nd April 2018.
