Global VAT Guide: January 2026

The January edition of the Global VAT Guide features comprehensive updates on many VAT regulations and developments in Austria, Czech Republic, Greece, Lithuania, Portugal, Romania, Slovakia, Slovenia, Sweden, Canada, Kazakhstan, Nigeria, Philippines, Ukraine, United Arab Emirates, and the United Kingdom. 

Use this summary to stay informed of the latest regulatory changes, effective dates and compliance implications for your business.

Austria

Updated Annual VAT return and updated Preliminary VAT return

The Federal Ministry of Finance (Bundesministerium der Finanzen) has released an updated version of the Annual VAT Return (U1) applicable to the 2025 reporting period.

The update introduces changes to ensure the correct reporting of VAT on photovoltaic modules, specifically in cases where the underlying contract was concluded before 7 March 2025.

The Federal Ministry of Finance (Bundesministerium der Finanzen) also released a new Preliminary VAT Return form applicable to the 2026 reporting period.

The changes relate to the correct reporting of VAT on photovoltaic modules for supplies attributable to periods up to 31 March 2025 or 31 December 2025, where the underlying contract was concluded before 7 March 2025.

Czech Republic

VAT Assessment of Passenger Transport Services provided via mobile apps, effective retroactively from 1 January 2025

In October 2025, the Czech tax authorities issued new guidance on VAT registration obligations for providers of passenger transport services offered through mobile applications (e.g. Uber, Bolt, Liftago).

The guidance applies retroactively from 1 January 2025 and replaces the previously applicable guidance effective from 1 January 2023 (Ref. No. 6675/23/7100-30118-012884 dated 15 February 2023).

A person providing passenger transport via a mobile application (the “transport provider”) is considered a taxable person for VAT purposes due to the performance of an economic activity.

This applies even where the transport provider does not hold the relevant trade license, provided the activity is carried out on an ongoing basis and for remuneration.

A company providing access to software in the form of a mobile application is also considered a taxable person.

This includes services consisting of access to and use of the application, as well as services enabling the receipt of transport requests (the “mobile application access service”).

This applies to application providers such as Uber, Bolt, and similar platforms.

Standard VAT Registration Threshold

• If annual turnover exceeds CZK 2,000,000 (approximately €80,000), VAT registration is required from 1 January of the following calendar year.
• The VAT registration application must be submitted within 10 working days after exceeding the threshold.

Immediate VAT Registration

• If turnover exceeds CZK 2,536,500 (approximately €104,000) during the calendar year, VAT payer status arises on the day following the threshold being exceeded.

Voluntary VAT Registration

Voluntary VAT registration remains possible where the conditions set out in Section 94a of the Czech VAT Act are met.

Greece

eInvoicing mandate confirmed with Implementation Timeline for 2026

On 16 September 2025, the Independent Authority of Public Revenue (IAPR) of Greece announced that the mandatory eInvoicing framework has been approved, together with a phased implementation timeline for 2026.

This announcement represents a further step in Greece’s ongoing digital tax reporting transformation and will significantly impact businesses operating in Greece.

The eInvoicing mandate applies to all taxpayers subject to the Greek Accounting Standards, meaning:

• All companies headquartered and established in Greece are within scope of the private-sector eInvoicing requirements.

Implementation timeline

• Large enterprises (annual gross revenue exceeding €1,000,000 in FY 2023):
  • Mandatory eInvoice processing from 2 February 2026
  • Transitional period during which PDF invoices are still accepted until 31 March 2026
• All other Greek taxpayers:
  • Mandatory eInvoice processing from 1 October 2026
  • Transitional period during which PDF invoices are still accepted until 31 December 2026

Taxpayers subject to the mandate must submit a Declaration of Commencement of Electronic Publication of Records to the IAPR prior to implementation.

Mandatory eIinvoicing applies to:

• B2B transactions between Greek companies or Greek establishments in the private sector
• Export transactions to customers established outside the European Union
• B2G transactions with the public sector (already mandatory since 1 January 2025)

All eInvoices must first be transmitted in real time to the IAPR.

Available transmission options include:

• IAPR-provided solutions such as myDATAapp and Timologio
• A PEPPOL-certified eInvoicing platform
• Direct integration via a company’s ERP system, using the IAPR API

Once received, the IAPR validates the invoice and assigns a Unique Registration Number (MARK), confirming that the invoice has been issued through a certified channel.

• Only after the MARK is assigned may the eInvoice be delivered to the recipient
• The recipient must confirm receipt and acceptance
• A QR code is also generated for validated eInvoices, serving the same authentication purpose

The IAPR has already developed:

• A standardised XML structure for eInvoices
• Extensive technical documentation
• A REST API for ERP integration

These specifications are based on the myDATA Publication – Technical Specifications, which have been in use in the public sector since 2020, making them a mature and reliable standard.

This mandate is a continuation of Greece’s broader digital tax reporting strategy. Greek taxpayers already report transactional data to the IAPR via myDATA. The introduction of mandatory eInvoicing represents an additional layer of tax control, rather than an entirely new reporting obligation.

Lithuania

New VAT Return Form applicable from 2026

On 30 December 2025, the Lithuanian tax authority released an updated VAT Return form applicable to reporting periods starting 1 January 2026.

The updated form reflects the introduction of a 12% reduced VAT rate, which replaces the previously applicable 9% reduced rate.

Portugal

Draft Budget Law 2026 proposes changes to Digital VAT Reporting timelines

On 9 October 2025, the Portuguese Budget Law for 2026 was drafted and submitted to Parliament.

The draft law proposes adjustments to the timelines for digital VAT reporting and SAF-T filing, pending final approval and publication in the official Gazette.

Key proposed changes include:

• Acceptance of PDF and printed invoices
  • PDF and printed invoices will continue to be accepted as legal documents until 31 December 2026.
  • This represents a one-year extension from the previous deadline of 31 December 2025, as established in last year’s Budget Law.
• Annual Accounting SAF-T reporting
  • The first reporting period for the Annual Accounting SAF-T has been postponed to 2027, previously set for 2026.
  • The detailed account registry applies to established Portuguese companies subject to Corporate Income Tax (CIT) and Personal Income Tax (PIT).
  • Reports for the 2027 fiscal year will be due in 2028.

The Portuguese State Budget for 2026 (Law No. 73-A/2025) was approved and published in the Official Gazette No. 250/2025 on 30 December 2025.

Among the measures adopted is the extension of the provision allowing PDF files to be treated as electronic invoices for all purposes under Portuguese tax legislation, until 31 December 2026.

This means the requirement to use a Qualified Electronic Signature (QES) has been postponed until 31 December 2026.

Until 31 December 2026, invoices in PDF format are accepted and are considered electronic invoices for all purposes under tax legislation.

Romania

Digitisation of Postponed Import VAT Accounting

On 12 November 2025, the Romanian Customs Authority introduced the online management of the postponed import VAT accounting scheme.

This builds on the existing framework established under Order 3225/2020 (31 December 2020) and applies to VAT-registered companies meeting specific criteria.

A company may apply for postponed import VAT if it:

• Is registered for VAT in Romania
• Has imported goods with a value exceeding RON 50 million (approx. €10,000) over the last 6 months, with supporting documentation
• Can provide proof of solvency and absence of public debts

Application and certification process

• The taxpayer submits an application with supporting documentation to Romanian Customs.
• Customs reviews the application within 30 days and issues a certificate if requirements are met.
• If information is incomplete, Customs requests additional documentation, which must be submitted within 30 days.

The certificate may be modified or cancelled by the taxpayer at any time during its validity.

Customs may also revoke the certificate if compliance requirements are no longer met.

Each certificate is valid for 6 months.

The certificate must be presented during the import procedure to apply postponed import VAT accounting.

Renewal follows the same process: submission of a new application with supporting documentation.

Once imports are made using the certificate, the import VAT is reported in the VAT return.

VAT is paid and simultaneously deducted in the same return.

Key changes under Order 3168/2025 include:

• The entire application, issuance and management process is now digital
• Any existing paper certificates remain valid until their expiration

This digitisation simplifies compliance and reduces administrative burden for eligible Romanian VAT-registered importers.

Slovakia

Draft VAT Bill introduces eInvoicing for the Private Sector

On 6 October 2025, the Slovakian Prime Minister, together with the Ministry of Finance, forwarded a draft bill amending the VAT Act to introduce eInvoicing for the private sector, transposing Council Directive (EU) 2025/516 on VAT rules for the digital age.

The draft was initially published for consultation on 11 February 2025 and has seen no significant amendments since.

B2G eInvoicing in Slovakia

eInvoicing is already mandatory in the public sector (B2G).

B2B eInvoicing in Slovakia

For the private sector (B2B), businesses are expected to begin issuing eInvoices from 1 January 2027.

All VAT-registered businesses trading within Slovakia must issue eInvoices to their business customers.

eInvoices must be sent via an official Peppol network platform, recognised by the Slovak Financial Administration, acting as the national Peppol authority.

eInvoices must also be submitted to the Administration within 5 days of issuance.

Approval is not required prior to forwarding to the buyer, allowing a decentralised, flexible reporting approach.

B2C eInvoicing in Slovakia

For B2C transactions, invoices to end consumers are not required to be eInvoices.

These transactions are covered by the cash register regime (eKasa) and simplified invoices up to €400, reported via the Control List submitted with the VAT return.

eInvoices must comply with EN 16931 standards, using:

• Peppol BIS 3.0 UBL (Universal Business Language)
• UN/CEFACT Cross-Industry Invoice (CII) syntax

These internationally recognised formats allow software vendors to implement solutions without compatibility issues and support automated, seamless reporting.

Slovakia is actively preparing for the digitalisation of VAT reporting.

The eInvoicing mandate aims to:

• Reduce administrative burdens
• Enable automated compliance
• Streamline business operations for B2B transactions

Businesses should start planning system integration and process alignment in preparation for the 2027 rollout.

Slovenia

eInvoicing framework established under ZIERDED

On 6 November 2025, the Slovenian National Assembly published the Act on the Exchange of Electronic Invoices and Other Electronic Documents (ZIERDED), officially establishing the eInvoicing framework in Slovenia.

B2B transactions

• Mandatory for all VAT-registered businesses, including non-established companies, for domestic Slovenian B2B transactions.
• Effective date: 1 January 2028.

B2C transactions

• eInvoicing is voluntary for providers
• Consumers may opt in or withdraw consent at any time
• If no einvoice is issued, a paper invoice must still be provided.

The Ministry of Finance highlights that eInvoicing will reduce compliance burdens and costs, improve efficiency, and streamline reporting.

Technical standards and platform details include:

• File standard: e-SLOG 2.0, compliant with EN 16931 as per EU regulations.
• Platform for communication: Public Payments Administration (UJP), developed for business and einvoice providers.

Exchange options (decentralised 4-corner model):

• Email providers
• Proprietary systems for direct exchange
• International PEPPOL network
• MiniBlagajna – free official application for smaller businesses

Businesses must have formal agreements with clients and vendors for exchanging eInvoices.

The adoption of ZIERDED aligns Slovenia with the EU VAT in the Digital Age initiative, targeted for implementation from 2030.

Businesses should begin planning for system integration, process alignment, and agreements with clients and vendors to ensure compliance by 2028.

Sweden

Proposal for Online Access by Skatteverket for audits

On 20 November 2025, the Swedish Ministry of Finance referred a proposal to the Council of Legislation that would allow the Swedish Tax Authority (Skatteverket) to conduct inspections and audits via online access to company records.

This follows the 17 February 2025 Modern Control Tools proposal, which included the abolishment of the prohibition against online audits.

Some of the objectives include:

• Simplify inspections and compliance checks for Skatteverket
• Reduce the administrative burden on businesses during audits
• Improve accuracy by allowing direct access to records, eliminating errors in copying or transferring information
• Mitigate risks of document distortion or withholding by auditees.

Companies using external servers or cloud accounting systems must provide real-time access to Skatteverket.

Seizure of technical tools or credentials is permitted if necessary to access online accounting systems.

The legal definition of “risk of sabotage” will be expanded to include concealment or destruction of technical tools or credentials required for audits.

Skatteverket and the Enforcement Authority (Kronofogden) will ensure that personal data handling complies with:

• GDPR
• Swedish secrecy laws
• EU confidentiality regulations

The proposed changes are planned to take effect from 1 April 2026. Companies should review cloud and external accounting system access protocols to ensure compliance. Businesses may need to implement secure mechanisms to allow Skatteverket controlled online access during audits.

Canada

CRA updates to the Voluntary Disclosures Program effective 1 October 2025

On 10 September 2025, the Canada Revenue Agency (CRA) updated its guidelines for the Voluntary Disclosures Program (VDP).

The program allows taxpayers to correct past tax non-compliance outside criminal prosecution and with relief from penalties and interest, subject to eligibility conditions.

The VDP applies to a wide range of Canadian taxes, including:

• Income tax
• Payroll and withholding taxes
• GST/HST
• Excise duties
• Other taxes administered under Canadian federal tax legislation

To qualify under the VDP:

• The disclosure must relate to errors or omissions that are at least one year past the original filing due date.
• The non-compliance must result in interest and/or penalties.
• The disclosure must be voluntary, complete, and include payment (or arrangements for payment) of all outstanding tax.
• The application must include all relevant supporting documentation evidencing the unpaid tax liabilities.
• The disclosure must be made outside of any ongoing audit, enforcement, or investigation by the CRA.

From 1 October 2025, the CRA may prompt a taxpayer regarding a potential compliance issue and offer the opportunity to correct it under the VDP.

• In such cases, eligible taxpayers may receive:
  • 25% interest relief
  • 100% penalty relief

Previously, the VDP applied only where taxpayers independently identified and disclosed compliance issues without prior CRA contact.

Under this scenario, eligible taxpayers may receive:

• 75% interest relief
• 100% penalty relief

Eligibility for relief is determined at the CRA’s discretion, based on the information provided through the voluntary disclosure process.

Taxpayers must submit the application together with all relevant documentation, which may include:

• Tax returns
• Invoices
• General ledgers
• Inventory records
• Delivery notes

For GST/HST, documentation must generally be retained for at least four years, although the CRA may request older records where necessary.

Canada

Manitoba to expand Retail Sales Tax (RST) to cloud computing services from 1 January 2026

The scope of Manitoba’s Retail Sales Tax (RST) will be expanded to include cloud computing services effective 1 January 2026.

As of 1 January 2026, suppliers of cloud computing services will be required to:

• Register for Manitoba RST
• Charge RST on taxable supplies
• Collect and remit the tax to Manitoba tax authorities

Scope of cloud computing services includes:

• Software as a Service (SaaS)
• Platform as a Service (PaaS)
• Infrastructure as a Service (IaaS)

Kazakhstan

Conditional VAT Registration for foreign companies effective from January 2026

By an Order of the Ministry of Finance of the Republic of Kazakhstan dated 29 October 2025, a dedicated VAT registration procedure has been introduced for foreign e-commerce providers.

The new rules apply from 1 January 2026 and require qualifying foreign suppliers to register for VAT after their first B2C sale to a resident of Kazakhstan.

The requirement applies in particular to:

• Internet platforms, including online stores and trading platforms intended for:
  • the sale of goods
  • the provision of services
  • the offering of services via public telecommunications networks and the Internet, including
  • the provision of intermediary services enabling the sale of goods or services, order placement, and payment on behalf of third parties through access to an online store and/or trading platform.
• Foreign companies operating through an Internet platform in Kazakhstan, i.e. non-resident legal entities selling goods or providing services through an Internet platform to customers located in the Republic of Kazakhstan.

VAT registration

VAT registration is required within one month following:

• the first sale to a Kazakhstani resident (B2C), and
• the receipt of payment from the Kazakhstani customer.

To register, foreign companies must submit a confirmation letter, translated into Russian or Kazakh, via the Integrated Tax Administration System.

Upon receipt of the letter, the tax authorities will assign a Business Identification Number (BIN) no later than the next business day.

The Committee of State Revenues will publish a list of registered foreign VAT payers on its website (www.kgd.gov.kz) under “Register of Foreign Companies Operating through an Internet Platform on the Territory of the Republic of Kazakhstan” within three working days of BIN assignment. Any changes to the information included in the register must be reported within 10 business days.

Nigeria

Mandatory eInvoicing for large taxpayers

Effective 1 November 2025, large taxpayers in Nigeria are required to issue eInvoices.

This follows a postponement of the original implementation date of 1 August 2025, after the Federal Inland Revenue Service (FIRS) reported that only around 20% of mandated taxpayers had successfully integrated with the national eInvoicing system.

The initial pilot phase for large taxpayers began in November 2024, during which the Merchant–Buyer Solution (MBS) platform was made available for testing.

Large taxpayers in Nigeria are defined as:

• VAT-registered resident businesses with annual turnover of at least NGN 5 billion (approximately €2.98 million).

These resident large taxpayers are required to integrate with the FIRS eInvoicing framework via the MBS platform.

Non-resident suppliers of goods and services selling directly to end consumers in Nigeria fall under the Simplified Compliance Regime for VAT and are fully exempt from eInvoicing obligations.

Nigeria has adopted a clearance-based Continuous Transaction Control (CTC) model, under which:

All eInvoices must be issued through the MBS platform and transmitted to FIRS for validation.

Upon validation, each invoice is assigned:

• a Unique Invoice Reference Number
• a Cryptographic Stamp Identifier
• a QR code, which is included on the PDF version of the invoice.

Only after successful validation may the eInvoice be delivered to the buyer through the MBS platform.

While FIRS retains control over the eInvoice lifecycle, the technical infrastructure and operational management of the platform are handled by the National Information Technology Development Agency (NITDA), which develops and maintains the MBS solution.

The Nigerian eInvoicing framework is intended to apply to:

• B2G transactions (transactions with the public sector)
• B2B transactions in the private sector
• High-value B2C transactions, defined as transactions exceeding NGN 50,000 (approximately €30)

At present, beyond the initial group of resident large taxpayers, no further detailed rollout timeline has been announced. This highlights the ongoing challenges faced by both businesses and tax authorities in adopting and integrating digital tax technologies without disrupting existing operational processes.

Philippines

BIR postpones eInvoicing implementation to 31 December 2025

On 5 September 2025, the Philippine Bureau of Internal Revenue (BIR) officially postponed the implementation of mandatory eInvoicing.

The eInvoicing requirements stem from Republic Act 12066, approved by the Philippine Congress in November 2024, which initially targeted:

• Large taxpayers with net annual turnover exceeding PHP 1 million
• E-commerce businesses and companies engaged in online transactions
• Companies using Computerised Accounting Systems (CAS), Computerised Books of Accounting (CBA), or other invoicing software

The original effective date for large taxpayers was March 2026, but this has now been postponed to 31 December 2026.

For other taxpayers, including exporters or retail businesses, eInvoicing will be required only once the BIR establishes a system capable of storing and processing eInvoices at the required capacity.

Philippine eInvoicing model

The Philippine eInvoicing model follows a Real-Time Reporting approach, under which:

• eInvoices must be reported to the BIR within 3 days of issuance
• Formats accepted: XML or JSON
• There is no centralised clearance processing; eInvoices can be delivered to customers at any point in the process

Additionally, the BIR is developing an Application Programming Interface (API) for machine-to-machine eInvoice reporting, which will allow taxpayers to automate the submission of eInvoices once operational.

This postponement provides additional time for:

• Large taxpayers and other early adopters to prepare systems for compliance
• The BIR to scale its eInvoicing infrastructure and support automated reporting

Taxpayers should plan for integration of their accounting or invoicing systems with the BIR API once it becomes available.

Ukraine

Planned introduction of Pre-Filled VAT Returns

On 12 September 2025, the Ukrainian State Tax Service (STS) met with representatives of the European Union to discuss further integration of Ukraine’s tax systems with EU standards.

A key topic was the introduction of pre-filled VAT returns for both Ukrainian-established taxpayers and non-resident electronic service providers supplying services to end consumers in Ukraine.

The STS confirmed that Ukraine’s VAT reporting processes are already fully automated and technically capable of supporting pre-filled VAT returns.

Since 2011, Ukraine has operated a real-time VAT reporting system applicable to:

• Domestic establishments
• Foreign electronic service providers supplying services to Ukrainian consumers.

Based on the data currently reported to the STS, the Chairman of the Verkhovna Rada Committee on Tax Policy indicated that pre-filled VAT returns are expected to be implemented by the end of 2025.

Pre-filled tax returns are not new in Ukraine. Similar functionality was already introduced for income tax and property declarations during 2023–2024. Extending this approach to VAT will allow taxpayers to:

• Review pre-completed VAT returns
• Identify and correct discrepancies before submission
• Reduce follow-up questions or audits triggered by inconsistent reporting.

The introduction of pre-filled VAT returns would:

• Further align Ukraine’s tax administration with EU digital tax practices,
• Reduce administrative burdens for taxpayers, and
• Improve data accuracy and compliance efficiency.

United Arab Emirates

Five-year limitation on VAT Refunds and Credit Balances

Starting 1 January 2026, the UAE will impose a five-year limitation period for claiming VAT refunds and recovering credit balances, under amendments introduced by:

• Federal Decree-Law No. 16 of 2025 (VAT Law)
• Federal Decree-Law No. 17 of 2025 (Tax Procedures Law)

Some key changes include:

Refund Requests

• Taxpayers must submit requests to recover surplus VAT or credit balances within five years from the end of the relevant tax period.
  • Claims submitted after this period will lapse.

Use of Credit Balances

• Credit balances may be used to settle tax obligations within the same five-year timeframe.

Exceptions

• Refund requests may be submitted if the credit balance arises after the five-year period or within the last 90 days of the period.

Transitional Relief

• Taxpayers whose five-year period expired before 1 January 2026, or will expire within one year after that date, may submit refund requests within one year from 1 January 2026.

Audit Provisions

• The Federal Tax Authority retains enhanced powers to audit refund requests submitted in the final year of the limitation period.

These amendments aim to enhance clarity, fiscal discipline and certainty for taxpayers, while aligning the UAE VAT framework with international best practices. For full details, refer to the official texts of the amended VAT and Tax Procedures Laws.

What you should do now

• Review outstanding Credit Balances to identify VAT credits or surplus amounts approaching the five-year limit.
• Submit Pending Refund Requests and ensure all eligible claims are filed before the new rules take effect.
• Adjust their accounting and compliance systems to track the five-year limitation period for VAT refunds.
• If your five-year period expires before or within one year after 1 January 2026, prepare to submit claims within the extended grace period.

United Arab Emirates

Reverse charge mechanism introduced for scrap metals

On 14 November 2025, the UAE Ministry of Finance introduced a reverse charge mechanism (RCM) for the supply of scrap metals.

The measure aligns the UAE VAT treatment with approaches commonly applied in the European Union. The decision applies from 14 January 2026.

The reverse charge applies to scrap metals supplied for the purpose of processing or resale by the purchaser.

Under the reverse charge mechanism:

• The supplier does not charge VAT and reports the supply as a zero-rated supply.
• The purchaser accounts for VAT on the acquisition and may simultaneously deduct input VAT, subject to the normal VAT recovery rules.

How to apply the reverse charge mechanism

Purchaser obligations:

• Provide the supplier with a declaration confirming that the scrap metals will be used for processing or resale.
• Provide evidence of valid VAT registration in the UAE.

Supplier obligations:

• Verify the purchaser’s VAT registration status.
• Retain the purchaser’s declaration of intended use.
• Clearly state on the invoice that:
  • the supply is subject to the reverse charge mechanism, and
  • VAT is payable by the purchaser in accordance with Cabinet Decision No. 153 of 2025.

No further amendments or clarifications have been issued since publication. The reverse charge mechanism therefore takes effect on 14 January 2026.

Suppliers and purchasers involved in scrap metal transactions should:

• Update invoicing and contract wording,
• Implement procedures for obtaining and validating purchaser declarations
• Ensure correct VAT reporting under the reverse charge mechanism.

United Kingdom

Guidance on Import VAT

On 28 November 2025, HMRC published a collection of Guidance on Import VAT issued over the years, covering key topics for businesses importing goods into the UK.

Topics included in the collection:

• Checking when you can account for import VAT on your VAT Return
• How to complete your VAT Return to account for import VAT
• Obtaining your postponed import VAT statement
• Understanding your monthly postponed import VAT statements
• Managing your import duties and VAT accounts

Recently updated guidance (June 2025):

• Checking when you can account for import VAT on your VAT Return
• Managing your import duties and VAT accounts

Accounting for import VAT on the VAT Return allows taxpayers to declare and recover import VAT on the same return, rather than paying it upfront at the point of import and reclaiming it later. This method is commonly referred to as postponed VAT accounting.

Postponed VAT accounting

When completing the import declaration, taxpayers may select to account for import VAT on their VAT Return. No changes to the chosen method are allowed once the declaration has been submitted.

Taxpayers must enter their VAT registration number at the header level in Data Element 3/40. Do not use Method of Payment G in Data Element 4/8. VAT will be recorded against the taxpayer’s EORI number, at the declaration level.

Different rules apply to goods in consignments valued at £135 or less. Currently, low value imports (LVIs), goods valued at £135 or less imported into the UK, benefit from customs duty relief. VAT has applied to these goods since reforms introduced in 2021. Due to a significant increase in LVI volumes in recent years, the government has reviewed existing customs arrangements and concluded that reform is required. At the Autumn Budget 2025, the Chancellor announced that the LVI relief will be removed by March 2029 at the latest.

The government’s consultation seeks feedback on the design of the new arrangements, including:

• Data collection: which information should be captured from importers and/or marketplaces
• Tariff application: how duties should be calculated and applied to LVIs
• Administrative fees: whether an additional fee should be applied to fund administration
• VAT collection: potential changes to VAT treatment to reflect the new arrangements

The consultation represents an opportunity for businesses and stakeholders to influence the design of the new customs framework for LVIs. The consultation will close on 6 March 2026.

United Kingdom

HMRC publishes “Initiate Payment”

On 5 January 2026, HM Revenue & Customs (HMRC) published its new Initiate Payment API, aimed at reducing compliance and payment burdens for both taxpayers and HMRC through increased digitalisation and automation.

The API introduces a payment journey model, allowing payments to be initiated digitally and tracked through defined status flags.

HMRC has published detailed technical documentation, including:

• Payment status indicators
• Client-side and server-side error handling
• Standardised responses using HTTP status codes.

The API is designed for integration with third-party software. A developer sandbox environment is available for testing and familiarisation. Using the Initiate Payment API, third-party software can:

• Redirect users to GOV.UK to begin a payment journey with HMRC
• Prepopulate the payment reference and amount
• Retrieve the status of a payment journey, including whether the payment was:
  • completed
  • scheduled
  • cancelled, or
  • unsuccessful

The release of the Initiate Payment API demonstrates HMRC’s continued focus on:

• end-to-end digital communication
• automated and traceable payments, and
• reducing non-compliance and administrative friction for taxpayers and software providers.

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