Global VAT & Indirect Tax News

The Lebanese government announced a 1% VAT increase from 11% to 12% pending parliamentary approval, with an immediate 25% hike in petrol prices and no change to diesel. The government also aims to improve tax collection and customs duties, issue collection orders for quarries, and review maritime properties.

Azerbaijan’s Parliament has approved a new VAT regime for non‑resident digital service providers, requiring local registration, charging, collecting and remitting VAT from 1 January 2026. The change replaces the previous withholding‑tax or optional‑registration system, introduces a USD 10 000 annual sales threshold and ends the B2B reverse charge that had been in place since 2023. The current VAT rate on digital services remains 18%.

This article explains the technical intricacies of the Peppol discovery process, detailing how participant identifiers are hashed and resolved via DNS to Service Metadata Publishers (SMPs). It highlights key components such as the Service Metadata Locator (SML), SMP metadata signing, and the lack of fallback routing, underscoring the importance of correct configuration for reliable e‑invoicing.

Irish Revenue has clarified that for Phase One of its VAT Modernisation programme, a "large corporate" is defined by management by the Large Corporates Division rather than turnover. From 1 November 2028, all VAT‑registered businesses in Ireland must be able to receive structured e‑invoices, and those within scope must issue EN16931‑compliant e‑invoices and transmit data to Revenue. The programme introduces mandatory electronic invoicing and real‑time reporting for domestic B2B transactions.

Lebanon’s cabinet approved a one‑percentage‑point increase in VAT from 11% to 12% and raised the price of a 20‑litre petrol canister by 300,000 Lebanese pounds. The government also announced a pay rise for public sector workers and retirees, while abolishing a diesel levy and increasing customs fees on shipping containers.

The Upper Tribunal ruled that Lycamobile UK must pay more than £50 million in VAT, requiring the operator to charge VAT on the full price of prepaid mobile bundles at the point of sale, rather than only on services actually used. The decision, dated 12 Feb 2026, overturns Lycamobile's previous VAT calculation method.

Sweden is preparing to overhaul its One‑Stop Shop (OSS) and e‑commerce VAT rules effective 1 January 2027. The changes clarify deemed‑supplier status for platforms, tighten distance‑sales threshold conditions, redefine the interaction with the domestic threshold, expand the third‑country OSS regime, and refine input‑VAT deduction and refund regimes.

Bangladesh's National Board of Revenue (NBR) has extended the deadline for filing online VAT returns for the January 2026 tax period by one week, until 22 February 2026. The extension was granted due to holidays and temporary disruptions to the e-challan system and VAT server. Taxpayers can now file through the e‑VAT system until the new deadline.

Bangladesh’s National Board of Revenue has revised the VAT structure on liquefied petroleum gas (LPG), removing the 7.5 % VAT at local production and trading stages and the 2 % advance tax at import. A uniform 7.5 % VAT will now be applied at the import stage, effective 16 February 2026 and set to remain until 30 June 2026. The change is expected to lower the overall VAT burden on consumers by roughly 20 %.

Nigeria’s 2025 Tax Act removes VAT on land, completed buildings, and both residential and commercial rent, effective January 2026. The reform allows contractors to recover input VAT on construction materials and gives tenants rent relief up to ₦500,000, capped at 20 % of annual rent. Mortgage interest for owner‑occupied homes remains tax‑deductible.

Delaying VAT compliance while upgrading to SAP S/4HANA exposes companies to rework, higher costs, and regulatory penalties. Early integration of VAT and e‑invoicing solutions can prevent errors, reduce audit risk, and accelerate time‑to‑value. The article warns that legacy SAP ERP systems will reach end‑of‑support in 2027, urging firms to embed compliance from day one.

Ireland's Revenue has confirmed that large corporates will be required to issue structured e‑invoices for domestic B2B transactions from 1 November 2028, as part of the phased rollout of the EU ViDa e‑invoicing and real‑time reporting initiative. The regime will expand to all cross‑border EU B2B transactions benefiting from 0% VAT in Phase Two (November 2029) and to all cross‑border B2B transactions under the EU directive from 1 July 2030.

The February 2026 Global VAT Guide provides a concise overview of recent VAT and e‑invoicing developments across Europe, the EU, Japan and Mexico. Key updates include Belgium’s new place‑of‑supply rules for virtual events, Croatia’s extended VAT return deadline, the Czech Republic’s InstatEvo transition, a temporary €3 customs duty on low‑value goods in the EU, and changes to Belgium’s federal tax payment BIC code.

The article reviews recent EU Court of Justice rulings that clarify the VAT treatment of transfer‑pricing adjustments in intragroup transactions. It explains that payments calculated under OECD methods may be treated as VAT‑subjected remuneration for services, while unilateral profit allocations are generally outside VAT scope. The piece also highlights the pending Stellantis Portugal opinion and the need for businesses to document services and support evidence to secure VAT recoverability.

The OECD’s 2026 report outlines guidance on Digital Continuous Transactional Reporting (DCTR), urging jurisdictions to adopt real‑time VAT transaction reporting and structured e‑invoicing. It highlights the EU’s ViDA initiative, slated for rollout by 2030, and the requirement for intra‑EU invoicing interoperability by 2035. Businesses are advised to modernise ERP and billing systems, improve data quality, and strengthen security to meet the forthcoming digital compliance landscape.

The article discusses the EU’s longstanding VAT exemption for financial services, noting that the exemption was introduced in 1977 and remains in place across EU member states, Iceland, and the UK. It reviews the European Parliament’s February 2026 draft report, which calls for modernising the tax framework, highlights the 91 sector‑specific taxes that have emerged, and explores options such as abolishing the exemption for B2B services or differentiating between B2B and B2C. The piece underscores the hidden costs, market distortions, and competitiveness concerns that the current exemption creates.

The National Board of Revenue (NBR) in Bangladesh has extended the deadline for filing online VAT returns via its e‑VAT system to 22 February 2026. The extension was granted to accommodate government holidays around Shab‑e‑Barat, a national election, and technical disruptions on 15 February. Taxpayers are urged to submit their January 2026 returns within the new period to avoid penalties.

China's Ministry of Finance announced a phased rollback of VAT export rebates for battery products, cutting the rebate from 9% to 6% from April 2026 to December 2026 and eliminating it entirely from January 2027. Photovoltaic product rebates will also be scrapped from April 2026. The move is expected to squeeze margins for exporters unless they can pass costs to overseas buyers, with industry experts forecasting gradual price increases of 2–3% for power batteries and 2–4% for energy storage batteries.

China has lowered the import VAT on 16 agricultural products, including refined sunflower and rapeseed oils, from 13% to 9% effective 2 February 2026. A new tariff line 1512190010 was created for refined sunflower oil, and the change applies to a range of oils and fats. Products imported from the USA remain subject to retaliatory MFN tariffs.

This HMRC internal manual provides guidance on how VAT applies to local authorities and other government and public bodies in the UK. It covers various categories such as non‑business activities, police authorities, NHS capital projects, and local government partnership programmes. The manual serves as a reference for VAT compliance and exemptions for public sector entities.