Global VAT & Indirect Tax News

The UK First‑Tier Tax Tribunal issued a judgment on Jan. 9 clarifying input VAT deduction and zero‑rating rules for second‑hand car transactions. The case involved a company that purchased high‑value used cars in Northern Ireland and sold them to customers in the Republic of Ireland. The Tribunal found that the taxpayer could not claim the input VAT deduction and zero‑rating as the Tax Agency had denied the claims.

Denmark’s Ministry of Finance announced a planned cut to the VAT on basic foodstuffs in 2028, with debate over whether the reduction should apply to all food or only fruit and vegetables. The proposal would require amendments to the VAT Act and could involve either a 20% reduced rate or a targeted zero‑rate for certain categories. Implementation is expected to be delayed due to technical complexity.

Liberia will replace its existing 12% Goods and Services Tax (GST) with an 18% Value Added Tax (VAT) regime effective 1 January 2027. The GST will be increased to 13% from 1 January 2026, and businesses can begin VAT registration from 1 July 2026. The new VAT will allow input tax deductions, eliminating the cascading effect of the current GST.

Experts and tax officials at an ICSSR‑sponsored seminar in Hyderabad called for a balanced approach to India’s upcoming GST 2.0 rollout, highlighting the need to simplify rates while protecting revenue. They warned against the misuse of the three‑day registration approval window and the inverted duty structure in sectors such as textiles and fertilizers.

Turkey has extended the VAT exemption for inward processing regime (IPR) purchases until 31 December 2030. The decision, published in the Official Gazette on 29 January 2026, adds five years to the exemption that had been in place for about 27 years. Export‑oriented firms can continue to buy domestically sourced raw materials and intermediate goods without paying VAT, easing cash flow and supporting local supply chains.

This HMRC internal manual provides guidance on the reverse charge procedure, a measure designed to counter criminal attacks on UK VAT. It outlines the application and implementation of the reverse charge mechanism for relevant transactions.

The UK First‑Tier Tribunal clarified that a logistics provider acting as an agent in its own name can recover import VAT on clinical trial drugs, overturning HMRC’s earlier denial. The tribunal held that the taxpayer’s lack of ownership and supply for consideration did not preclude input‑VAT treatment. The decision, case No. TC09749, was issued on 14 January 2026.

The article explains how the upcoming ViDA framework will eliminate tolerance for inconsistencies between VAT determination, invoicing and reporting, pushing control to the transaction level. It highlights that intra‑EU transactions will require near real‑time digital reporting, and notes key future dates for reverse‑charge harmonisation and the withdrawal of the European Sales Listing. The piece also discusses the implications for triangulation and supply‑chain transactions and promotes a single‑engine solution for compliance.

Poland is proposing a 3% Digital Services Tax (DST) on digital platforms’ advertising, data services and intermediary services, targeting companies with global revenues over €1 billion and Polish revenues above €250 million. The tax will apply only to income from Polish users and will credit Polish corporate income tax paid to reduce double taxation. A public consultation will begin in February 2026, with a draft bill expected after stakeholder feedback.

Ghana's recent VAT reforms aim to correct structural weaknesses rather than provide immediate price cuts. Key changes include abolishing the COVID‑19 Health Recovery Levy, allowing NHIL and GETFund levies to be credited as input VAT, raising the goods‑based registration threshold, and phasing out flat‑rate schemes. The reforms also emphasize electronic invoicing to improve compliance and revenue collection.

Poland’s new National e‑Invoicing System (KSeF) will become mandatory for businesses in February 2026, following a delay from July 2024 to accommodate extensive consultations. The article compares the rollout to the controversial Polish Deal reforms, noting that large firms are largely prepared while smaller enterprises may face readiness challenges.

HMRC has introduced a new requirement for UK VAT registration, effective 19 January 2026, that businesses must provide the unique VAT registration application reference number before adding VAT to a Business Tax Account. This step aims to close a fraud window where criminals linked VAT numbers to Government Gateway accounts before the legitimate owner could log in. Businesses should safeguard the reference number and act swiftly after registration to mitigate fraud risks.

Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) has issued amendments to the VAT Implementing Regulations that clarify the responsibilities of electronic marketplaces and e-commerce platforms. The changes define when a marketplace is deemed to facilitate a supply and therefore liable for VAT, and introduce phased effective dates for compliance. Businesses operating in the Kingdom should review their operating models and contractual arrangements to ensure alignment with the updated framework.

Canada Revenue Agency has reversed its 35‑year position, treating mutual fund trailer commissions as subject to GST/HST. The change will take effect on July 1, 2026, requiring dealers to collect and remit the tax, while managers can recover it as input tax credits. Industry groups argue the implementation deadline is unrealistic and the change adds costs without revenue benefits.

The article discusses Canada’s new Canada Groceries and Essentials Benefit, a top‑up to the GST credit announced by Prime Minister Mark Carney on January 26, 2026. The benefit totals $11.7 billion over six years, covering 12 million people, and recipients can spend the money on any goods or services. The benefit does not affect grocery GST, which remains exempt except for snacks.

Portugal’s government has drafted a bill to cut VAT on construction for own permanent housing to 6%, but the Portuguese Association of Chartered Accountants (OCC) deems the proposal unworkable due to its reliance on post‑construction third‑party checks. The bill would apply only to properties for own use with a sale value not exceeding €648,000, and would require contractors to issue zero‑VAT invoices with developers self‑assessing. OCC warns that the uncertainty could force builders to absorb the difference between 6% and the standard 23% rate.

The European General Court issued an order on 21 January 2026 in Case No. T-394/25, upholding the EU VAT deemed supplier model that requires online platforms to collect and remit VAT for short‑term accommodation rentals. The court found the taxpayer’s challenge inadmissible under the Treaty on the Functioning of the EU. This decision confirms the compliance obligations for platforms operating in the EU short‑term accommodation market.

Canada has increased the maximum GST credit from $700 to $900 to help low‑income families cope with high food inflation. A family of four could receive up to $1,890 this year and about $1,400 annually for the next four years. Eligibility is based on filing a tax return, and the change comes amid a 6.2% food inflation rate in December 2025.

The United Nations has released a new publication that consolidates four guidance papers aimed at strengthening VAT/GST systems in developing countries. The guidance covers fundamentals, small enterprises, refunds, and technology and compliance, including e‑invoicing, electronic reporting and big‑data analytics. It encourages tax administrations to adopt technologies thoughtfully rather than as one‑size‑fits‑all solutions.