Global VAT & Indirect Tax News

The article discusses the impact of the Philippines’ 12% VAT on households and the economy, and examines Senate Bill 1152’s proposal to reduce the rate to 10%. It highlights the fiscal implications, including a projected revenue loss of about P330 billion from 2026 to 2030, and the broader effects on consumer spending and government finances.

The Bahrain Tax Agency released an updated VAT general guide in English on Jan. 28, 2026. The guide clarifies that outsourced services are taxable, VAT is due on full consideration when third‑party providers assign roles under direct supervision, and employee salaries remain outside VAT. These updates aim to provide clearer guidance for businesses operating in Bahrain.

South African Revenue Services (SARS) is preparing to launch a mandatory e‑invoicing model, with full operational capability targeted for 2028. The initiative builds on the 2025 Draft Tax Administration Laws Amendment Bill and will include e‑invoicing, e‑reporting and a Peppol‑based interoperability framework. A phased rollout is planned for 2026‑2027, with stakeholder engagement and framework publication before the 2028 launch.

This guidance explains that German businesses can apply to extend the deadline for filing VAT returns by one month. If the extension is used, a special advance payment equal to one‑eleventh of the previous year’s advance payments must be paid, and it is credited in the December advance payment calculation. The special payment can be corrected upon application if expected VAT changes due to a rate change.

HMRC released guidance on 28 January 2026 for developers of tax software that use generative AI. The guidance sets five mandatory principles—transparency, reliable source data, human oversight, security/GDPR compliance, and ethical AI with continuous auditing—to ensure AI outputs are trustworthy and legally grounded. Compliance requires clear disclosure, audit trails, limited data sources, and ongoing monitoring of models.

A UK Upper Tribunal decision allows a bespoke hair‑replacement system for severe female hair loss to be zero‑rated under Schedule 8 of the VAT Act 1994. The ruling expands the definition of disability to include social and psychological impacts and confirms that composite supplies that adapt goods can qualify for relief. The case clarifies that wigs and similar products are not automatically treated the same, opening new zero‑rating opportunities for adaptive products.

Colombia’s Constitutional Court suspended the emergency decree that imposed a 19% VAT on online gambling, leaving operators subject only to the standard 15% GGR tax. The suspension, effective from 29 January 2026, will remain until the court’s plenary chamber issues a final decision. The 19% VAT, originally introduced in February 2025 on deposits, expired on 31 December 2025 before being shifted to GGR.

China’s Ministry of Finance and State Taxation Administration has reclassified certain telecom services, raising the VAT rate from 6% to 9% on mobile data, SMS, MMS, and broadband access. The change takes effect from the beginning of 2026, prompting operators to consider price adjustments or bundle redesigns to mitigate revenue impacts.

The Guyanese Ministry of Finance announced the 2026 budget speech on Jan. 26, outlining several VAT and tax changes. Key measures include removing VAT on locally made furniture, jewelry, security equipment, and specific vehicles, maintaining a zero excise tax on petroleum, extending the end date for adjusted freight charges to Dec. 31, and increasing the monthly old‑age pension to 46,000 GYD effective Jan. 1.

Latvia has increased its Intrastat reporting thresholds for 2024, raising the Arrivals threshold to €380,000 and the Dispatches threshold to €220,000. These new thresholds will take effect on 1 January 2026, aligning Latvia with updated EU Intrastat reporting requirements.

Poland has made B2B e‑invoicing mandatory with the launch of KSeF 2.0 on 1 February 2026. Large firms (turnover > PLN 200 million) must use the new platform, while the previous KSeF 1.0 and MCU are shut down. The mandate will extend to all other VAT‑registered businesses on 1 April 2026, with micro‑entrepreneurs exempt until 1 January 2027.

China Telecom and China Unicom will be subject to a 9% VAT rate on core telecom services, as announced on 1 February 2026. This marks a change in the VAT treatment for these services. The announcement highlights the new rate for the companies' core telecom operations.

UAE will roll out a national e-invoicing system in 2026‑27, moving from paper to structured digital invoices. The pilot starts July 2026, with mandatory phases for high‑revenue businesses in January 2027, all VAT‑registered firms by July 2027, and B2G transactions from October 2027. Non‑compliance can trigger fines up to AED 5,000 per month.

The article discusses how indirect tax functions are evolving from compliance to strategic partners, driven by AI, data, and new regulatory demands such as the OECD’s Pillar Two and the EU’s VAT in the Digital Age (ViDA). It highlights the impending mandatory e‑invoicing for Irish businesses in 2028 and the operational challenges companies face in preparing for real‑time reporting and data integration.

Romania has extended its eFactură e‑invoicing regime, delaying full enforcement for SMEs until 1 July 2026 and adding new obligations for non‑resident customers under Emergency Ordinance 89/2025. B2C transactions will be mandatory from 1 January 2025, with simplified invoices required, while penalties for non‑compliance are postponed until 31 March 2025. The country also launched full pre‑clearance submissions in July 2024 and introduced e‑transport reporting in July 2022.

Romania has extended the enforcement deadline for the mandatory RO e‑Factura e‑invoicing system for small taxpayers. Businesses with annual turnover below EUR 500,000 now have until 1 July 2026 to fully comply, giving them an extra 18 months beyond the original date. They must still prepare by testing uploads, cleaning data, working with software providers, and understanding XML requirements.

Experts at a CESS seminar in Hyderabad called for a balanced approach to India’s GST 2.0 rollout, emphasizing the need to simplify compliance while protecting revenue. They highlighted a proposed two‑slab rate structure of 5% and 18%, reforms to address inverted duty structures in textiles and fertilizers, and concerns over misuse of the three‑day registration approval window. The Trust‑First philosophy notes that 95% of taxpayers operate without intrusive scrutiny.

The Danish Customs and Tax Administration issued a Tax Council Binding Answer (No. SKM2026.54.SR) on Jan. 28, 2026, clarifying VAT deduction rules for management services provided by a Danish subsidiary of an EU-established AIF manager to its group‑affiliated parent. The ruling indicates that the taxpayer cannot be confirmed to be entitled to a full VAT deduction for costs used for both taxable domestic services and financial services delivered to its nonresident parent.

Venezuela’s official gazette published Decree No. 5,207 on Jan. 9, extending the temporary VAT exemption for import and sale of hydrocarbon fuels and additives until Jan. 11, 2027, effective from Jan. 12, 2026. The decree applies to state, state‑owned, mixed‑ownership, and private companies under the Organic Hydrocarbons Law, establishes documentation requirements, outlines customs procedures, and mandates semi‑annual evaluation by SENIAT.

The Polish Ministry of Finance clarified the VAT rules for determining a fixed place of business (SMPD) for the National e-Invoice System (KSeF). The clarification, effective 1 February 2026, allows taxpayers with sales below 200 million PLN in 2024 to continue issuing electronic or paper invoices until 31 March 2026. It also outlines the threshold for the general requirement to issue structured invoices via KSeF.