REGULATION WATCH- Gov’t looks to get its taxes up front from private sector suppliers + contractors: All government bodies will now deduct and remit a portion of VAT and schedule tax from any contracts they have with private sector vendors ahead of payment under a Tax Authority directive, according to a cabinet statement. The decision requires government bodies to deduct 20% of the VAT (which is currently at 14%) and the entirety of the “schedule tax” (a separate variable rate that applies to some goods and services) from the value of the contract before paying out the contractor, and automatically funnelling the tax money to the Tax Authority within a month. Companies remain responsible for remitting the balance.

This directive in part walks back an earlier decision that met immediate private sector backlash: The authority had decided in June to require state agencies to withhold 100% of the VAT or schedule tax on their contracts with private businesses. The private sector argued at the time that the move would squeeze their cashflows by forcing them to pay VAT on everything they buy from any subcontractors, but without giving them use of the VAT as a cushion.