Global VAT & Indirect Tax News

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.

The Philippine Court of Tax Appeals (CTA) issued a decision on Jan. 23, 2026 (Case No. 10626) clarifying the treatment of unutilized input VAT refunds on zero‑rated export sales. The decision addresses the denial by the Commissioner of Internal Revenue, which was based on a failure to substantiate the claim and invoices not covered by the approved Permit to Use Computerized Accounting System (PTUCAS).

France’s administration has finalized preparations for the mandatory B2B e‑invoicing and B2C e‑reporting regime that will take effect on 1 September 2026. A voluntary pilot began on 23 February 2026, involving 139 approved platforms and nearly 600 000 companies, with key milestones scheduled through February and a national communication campaign in March.

Colombia enacted Legislative Decree 1474 on 29 December 2025, raising VAT on alcoholic beverages to 19% from 5%, imposing 19% VAT on online gambling, and reducing the VAT‑free threshold for low‑value imports from USD 200 to USD 50. The decree also allocates 5% of the alcoholic beverage VAT to departments. These measures aim to stabilise public finances after the 2026 budget rejection.

This commentary highlights five significant Canadian GST/HST court decisions from 2025, covering topics from tobacco sales to insurance, medical services, optional term extensions, and Airbnb-listed condo sales. The rulings clarify exemption status, input tax credit eligibility, and the treatment of new supplies, providing guidance for tax planning and compliance in 2026.