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.

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.

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.

Switzerland will temporarily increase its VAT rate by 0.8 percentage points from 8.1% to 8.9% starting in 2028 for a decade to raise about 31 billion Swiss francs for defense spending. The change requires a constitutional amendment and a public consultation in spring, and the extra revenue will feed an armament fund with borrowing capacity.

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.

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.