Global VAT Guide: July 2026

The July 2026 edition of the Global VAT Guide brings together key VAT developments across Croatia, Italy, Norway, Poland, Romania, Spain, Brazil, Dominican Republic, India, Moldova, Philippines, Sri Lanka and the United Kingdom.

Governments worldwide continue to expand and mature their digital tax administration programmes, with eInvoicing and digital reporting increasingly becoming tools for real-time compliance monitoring rather than simply data collection. As tax authorities strengthen their digital capabilities, businesses must ensure their VAT processes, controls and reporting systems can support both compliance and growing levels of scrutiny in an increasingly digital tax landscape.

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

Croatia

FiskApp update simplifies fiscalisation workflows

Croatia has made practical improvements to its FiskApp tool, helping businesses manage fiscalisation requirements more efficiently under the Fiscalization 2.0 framework.

The update focuses on making invoice searches clearer, improving data handling and giving users better visibility of transaction status. Alongside the system changes, updated guidance is now available to support users.

• Fiscalisation in Final Consumption – Incoming Invoice Search: When searching for incoming invoices (purchase invoices), results now include the Personal Identification Number (OIB)
• Fiscalisation in Final Consumption – Outgoing Invoice Search: Users can now search outgoing invoices (sales invoices) by entering business premises as search criterion. This replaces the previous drop-down menu selection and gives more flexibility when filtering large volumes of transactions.
• Fiscalised Data Export: Fiscalised data can now be exported in both CSV and XLSX formats. This provides additional options for reporting, analysis and integration with internal systems.
• Administration enhancements: FiskApp now allows users to assign fiscalisation authorisations while confirming the email address used to receive eInvoice.
• Pairing Status Update: A new “Pending Pairing” status has been added to the Fiscalised Data and Pairing Status section. Users can now filter and view transactions that are waiting to be paired with corresponding invoices, making it easier to monitor incomplete or in-progress records.

The Croatian Tax Administration has also updated the user guidance available:

• In the Fiscalization 2.0 – Documentation section of the Tax Administration’s website
• Within the FiskApp application itself.

Better search functionality, clearer invoice identification and improved status tracking all help reduce manual effort and the risk of errors. For businesses managing high transaction volumes, these small changes can make a noticeable difference to day-to-day VAT compliance.

Italy

VAT return reconciliation campaign for 2025 returns

Italy is stepping up VAT compliance checks. The Italian Revenue Agency (Agenzia delle Entrate) has launched a nationwide data-matching campaign to identify inconsistencies in 2025 annual VAT returns.

The initiative, under Protocol No. 172588/2026, issued on 9 June 2026, uses electronic transaction data to prompt businesses to review and correct errors early – before formal enforcement action begins.

What is happening?

The Revenue Agency is cross-checking data from:

• eInvoices (e-fatture)
• Electronic daily receipts (corrispettivi telematici)

This data is being matched against submitted 2025 VAT returns. Where discrepancies are identified, businesses will receive a compliance letter.

Businesses may receive a compliance notification if any of the following apply:

Failure to file the Annual VAT Return

The mandatory 2025 VAT return has not been submitted.

Under-declared sales (Section VE)

A VAT return has been filed, but

• Section VE (Quadro VE) has not been completed, or
• The declared taxable turnover is unusually low.

Specifically, this applies where:

• The total taxable turnover is up to €1,000, and
• This amount is lower than the transaction values recorded in the Revenue Agency’s electronic databases

Missing reverse-charge VAT reporting

A VAT return has been submitted without completing Section VJ, despite the taxpayer receiving eInvoices that require reverse-charge VAT to be calculated and reported.

How businesses are notified

The Revenue Agency communicates the discrepancies through several channels:

• Certified Electronic Mail (PEC) to the business’s registered digital address
• Detailed data available via the taxpayer’s online portal under the “Cassetto Fiscale” and “Fatture e Corrispettivi” sections.
• In accordance with established administrative information-sharing procedures, the identified discrepancies are also made available electronically to the Guardia di Finanza.

How to correct errors

Businesses are encouraged to act quickly to reduce penalties.

90-day grace period for late filing

If the 2025 VAT return was not submitted, it can still be filed within 90 days of the 30 April 2026 deadline to regularise the position.

Voluntary disclosure

Businesses may correct errors or omissions by submitting an amended VAT and paying:

• Outstanding VAT
• Applicable interest
• Reduced administrative penalties

Reduced penalties under the voluntary disclosure regime are generally still available, even where tax inspections or audits have started, provided that no formal tax assessment or penalty notice has been issued.

What businesses should do now

This campaign is driven by automated reconciliation of electronic transaction data. That means discrepancies are easier to detect and harder to ignore. To stay compliant, businesses should:

• Monitor their PEC mailbox for any compliance communications from the Revenue Agency.
• Regularly review data in Cassetto Fiscale and Fatture e Corrispettivi portals.
• Promptly investigate and correct any identified discrepancies to minimise exposure to penalties before formal assessment proceedings are initiated.

Italy’s latest compliance campaign demonstrates why VAT reconciliation can no longer be treated as a post-filing activity. Tax authorities are actively comparing eInvoice data against VAT returns and identifying discrepancies automatically.

Norway

Mandatory digital bookkeeping and B2B eInvoicing

Norway has formally adopted new legislation introducing mandatory digital bookkeeping and business-to-business (B2B) eInvoicing.

The changes are now confirmed. Following earlier proposals, the Norwegian Ministry of Finance announced on 19 June 2026 that the amendments have been enacted after parliamentary approval and Royal Assent. This marks a clear shift towards structured, digital VAT compliance, with a phased approach to give businesses time to prepare.

Key dates to know

The legislation follows a staged implementation timeline:

• 1 July 2026: The amended rules formally enter into force
• 1 January 2027: Mandatory B2B electronic invoicing beings
• 1 January 2030: Mandatory digital bookkeeping requirements apply

This phased rollout separates invoicing obligations from broader accounting system requirements, allowing businesses to adapt gradually.

The amended BookKeeping Act introduces two core obligations.

1. Mandatory B2B eInvoicing from 2027

From 1 January 2027, businesses subject to bookkeeping requirements must issue invoices electronically for B2B transactions.

This means:

• Invoices must be created and sent in a structured electronic format
• Electronic invoicing becomes the standard approach for business transactions

2. Mandatory digital bookkeeping from 2030

From 1 January 2030, businesses must maintain fully digital accounting records using compliant systems.

These systems must be capable of:

• Receiving electronic invoices
• Automatically processing electronic invoices

This requirement goes beyond storage. It introduces a need for systems that can handle structured data and support automation.

Although the legal framework is now in place, practical details are still come.

The Norwegian Tax Administration is expected to publish:

• Regulations and technical specifications defining the approved eInvoice formats
• Regulations or administrative decisions outlining any exemptions from the mandatory eInvoicing and digital bookkeeping requirements.

In addition, the Ministry of Finance is expected to issue transitional rules governing implementation timelines. One key point expected from these rules is that businesses must have the technical capability to receive eInvoices by 1 January 2030.

What businesses should do now

Even with phased deadlines, early preparation is key.

Businesses operating in Norway should:

• Review invoicing processes to ensure readiness for structured eInvoicing by 2027
• Assess whether existing accounting systems can receive and process electronic invoices
• Plan for upgrades needed to meet digital bookkeeping requirements by 2030
• Monitor updates from the Norwegian Tax Administration on formats and exemptions

Poland

Proposed enhancements to KSeF eInvoicing System

Poland is planning further improvements to its National eInvoicing System (KSeF), following feedback from businesses during public consultations.

The Ministry of Finance presented a set of proposed enhancements on 9 June 2026. The focus is clear: improve system stability, strengthen security controls and make integration easier for businesses already using KSeF.

The consultation outlined several planned updates to the system architecture and access framework:

Permanent token-based authorisation

The Ministry has proposed keeping cryptographic tokens as a long-term authentication method for accessing KSeF.

If adopted, this would remove the previously planned deadline of 31 December 2026, for discontinuing token-based access.

The change is intended to support continuity for businesses with existing IT and ERP integrations that rely on token-based authentication.

Token lifespan and expiration controls

The proposals introduce enhanced security features allowing organisations to define custom token lifespans ranging from 1 to 365 days.

This functionality is designed to improve access governance by enabling businesses to manage third-party system access, including accounting and ERP integrations, with greater precision and control.

Expanded API Integration (KSeF 2.0)

The updated KSeF 2.0 API is expected to introduce enhanced data exchange features. These will include invoice-related event tracking, enabling:

• Monitoring of entity-driven invoice modification
• Tracking of external transaction-related events linked to invoices

The changes are designed to improve interoperability between KSeF and business ERP systems, enabling more advanced real-time synchronisation of invoice lifecycle data.

If implemented, these changes would deliver with greater operational stability, improved security controls and enhanced integration capabilities within the KSeF ecosystem.

Organisations using KSeF should continue monitoring regulatory developments, particularly regarding authentication policies and API specifications, to ensure timely adaptation of internal systems and processes.

Poland

VAT refund rules for foreign businesses in line with KSeF

Poland has updated its VAT refund rules for foreign businesses to reflect the rollout of mandatory eInvoicing through the National eInvoicing System (KSeF).

The changes, published on 5 June 2026 in the Official Gazette (Issue No. 736), align refund procedures with how invoices are now issued and accessed under KSeF.

The update focuses on how foreign businesses document VAT refund claims. Under KSeF, invoices for goods and services are generally issued through the platform and assigned a unique KSeF identification number. As a result, the requirement to attach copies of invoices to refund applications has been waived if the KSeF numbers are provided with the refund claim.

If invoices included in the claim have assigned KSeF numbers and the VAT refund application does not include these KSeF identification numbers, different rules apply depending on where the claimant is established.

EU-based businesses must:

• Submit copies (reproductions) of the relevant invoices electronically alongside the refund application
• This applies regardless of whether the original invoice was paper-based or electronic

Non-EU claimants must:

• Attach paper invoices to the VAT refund application
• Provide electronic invoices to the tax authorities on the submission date

The regulation includes transitional provisions to clarify which rules apply and when.

• For periods before 1 January 2026 (i.e. 2025 invoices): Previous VAT refund rules continue to apply
• For periods from 1 January 2026 onwards (i.e. 2026 invoices):  The new rules apply, provided the refund application is submitted on or after the regulation’s entry into force
• For quarterly VAT refund applications submitted before 6 June 2026: The previous rules still apply, even where the refund period relates to 2026.

The regulation entered into force on 6 June 2026, being the day following its publication in the Official Gazette.

This change is a direct consequence of Poland’s move to mandatory eInvoicing.

Foreign businesses seeking VAT refunds in Poland should review their refund procedures to ensure they capture and retain KSeF invoice identification numbers wherever available. Organisations should also verify that their supporting documentation complies with the revised requirements applicable to EU and non-EU claimants before submitting future VAT refund applications.

Romania

Exemption from mandatory eInvoicing for certain taxpayers

Romania has narrowed the scope of its national eInvoicing system. From 1 June 2026, several categories of individual taxpayers are no longer required to use RO e-Factura, shifting them from mandatory to voluntary participation

Romania has officially adopted Law No. 88/2026, published in Official Gazette No. 459 of 29 May 2026. This law amends Emergency Ordinance (OUG) No. 120/2021, which governs the national eInvoicing system (RO e-Factura).

The update rolls back earlier extensions and removes certain non-commercial taxpayers from the mandatory scope.

The exemption applies to specific categories of individual taxpayers. These groups can still choose to use the system voluntarily, but they are no longer required to do so.

1. Individuals identified by Personal Numerical Code (CNP):

• Individuals using a CNP as their tax identifier are fully exempt from mandatory eInvoicing.
• Where no tax identification is provided by the customer at the point of sale, invoices must be issued using a standardised placeholder tax code consisting of 13 zeros (0000000000000).

2. Individual farmers:

• Farmers operating under Romania’s special agricultural regime are excluded from the mandate.
• Their existing commercial logbooks remain valid for transaction tracking and audit purposes.

3. Copyright and intellectual property earners:

• Individuals earning income exclusively from copyright or intellectual property rights are no longer required to issue invoices through RO e-Factura.

4. Foreign Cultural Centres

• Foreign cultural institutes and similar entities operating under international agreements are exempt. This reflects practical challenges around local tax identification requirements.

Taxpayers who were previously required to use RO e-Factura, or who opted in voluntarily, can now deregister.

• Deregistration is completed by submitting Form 082
• Removal becomes effective from the first day of the following month

The exemption is limited to the categories listed above.

• Corporate B2B taxpayers remain fully within scrope
• Mandatory eInvoicing obligations still apply to companies operating in Romania

Businesses trading in Romania should act now to ensure their systems reflect the updated rules.

• Ensure ERP and billing systems clearly distingusih between corporate and exempt individual customers
• Ensure correct handling of B2C transactions using the 13-zero placeholder tax code where applicable
• Avoid disruptions by ensuring that transactions involving non-registered individuals do not block invoicing workflows

Spain

Special VAT refund regime for 2027 UEFA Champions League Final

Spain has introduced a targeted VAT relief for non‑EU businesses linked to the 2027 UEFA Champions League Final in Madrid. The measure removes two key barriers to reclaiming Spanish VAT: the reciprocity requirement and, in certain cases, the need to appoint a fiscal representative.

Under BOE No. 129 of 27 May 2026, Spain has introduced a temporary VAT refund regime for expenses connected with the 2027 UEFA Champions League Final.

The regime applies to non‑EU businesses submitting refund claims under the 13th Directive procedure (the mechanism for non‑EU companies to recover VAT incurred in EU Member States).

Reciprocity requirement waived

In a significant shift, Spain has suspended the reciprocity condition for qualifying claims. Under normal rules non-EU businesses can only recover Spanish VAT if their home country offers reciprocal VAT refunds to Spanish businesses.

For this event:

• That condition is temporarily removed
•  Businesses can submit refund claims even if their country does not offer reciprocity

To qualify:

• The VAT must be directly related to activities connected with the event
• The expense must still meet standard Spanish VAT recovery rules.

In practice, this opens the door for a wider group of non‑EU businesses to recover VAT incurred in Spain for event-related costs such as logistics, marketing or hospitality.

No fiscal representative requirement

Spain has also relaxed another key administrative requirement. Spain has suspended the obligation to appoint a fiscal representative for certain non-established businesses.

The exemption applies to entities not established in:

• the European Union,
• the Canary Islands, Ceuta or Melilla
• Any country with EU‑equivalent mutual assistance agreements

For qualifying businesses, this removes an extra layer of cost and complexity, making the refund process faster and more accessible.

This is a targeted but meaningful simplification. Large international events often create complex VAT challenges, particularly for non‑EU businesses. Spain’s approach shows how temporary, well-designed measures can reduce friction while maintaining compliance controls.

Brazil

New CBS rules reshape digital platform obligations

Brazil has introduced major new rules for digital platforms under its Contribuição Social sobre Bens e Serviços (CBS) system, significantly increasing the compliance burden for digital platforms, including non-resident operators.

Published on 30 April 2026, the rules form part of Brazil’s wider indirect tax reform.

Digital platforms face expanded liability

Digital platforms are no longer treated as just intermediaries. If they play an active role in transactions, including those that influence:

• Payment flows
• Delivery conditions
• Transaction terms
• Internet access or marketplace functionality
• Payment processing
• Advertising or search

They may be jointly and severally liable for CBS, or be required to account for tax in place of the supplier.

Liability is triggered where:

• The platform fails to provide required transaction data to the tax authorities, including supplier identification details, or
• The underlying supplier does not issue the required tax documentation

Platforms must ensure they have full visibility over sellers using their systems and robust controls around invoicing and data reporting. Relying on suppliers to manage compliance is no longer sufficient.

Real-time reporting and split payment mechanism

Where a platform processes payments, they must:

• Provide transaction-level data that allows CBS to be correctly calculated and collected
• Support a split payment mechanism, where CBS is separated and collected at source before funds reach the supplier

This effects marketplace operators, payment-enabled platforms and any business facilitating transactions with embedded payment functionality.

Flexible compliance models for platforms

The Regulation provides flexibility for digital platforms in fulfilling their obligations, but each comes with responsibility, including:

• Issue tax documents on behalf of suppliers, including consolidated invoices across multiple transactions
• Calculate and pay CBS themselves based on transaction data.

However, if they take on these roles, they remain accountable for any mismatch between reported and actual tax due.

Deemed supplier model (tax substitution)

A digital platform may elect to act as a tax substitute (deemed supplier) for domestic transactions. Under this model, the platform must:

• Issue tax documents for the supplier’s transactions
• Calculate CBS due
• Remit the tax based on transaction values

The original supplier remains liable for any differences, but the platform takes on primary operational responsibility. This model simplifies compliance for suppliers but significantly increases the platform’s tax exposure and reporting burden.

Role of Financial Institutions in CBS collection

Financial institutions involved in settling transactions also play a key role.

Where either the platform or supplier is not registered under the CBS identification system, financial institutions must:

• Apply reference rates
• Segregate and collect CBS during settlement

Any discrepancies between reference rates and the actual applicable rates must be corrected through:

• Additional payment by purchaser or importer, or
• Refunds where too much CBS has been applied

Key dates and phased rollout

The CBS regime will be introduced in stages, giving businesses time to adapt:

• 30 April 2026: Regulation enters into force (General application begins)
• 1 August 2026: Registration and invoicing obligations begin
• From 2027: Tax collection mechanisms, including split payments, become operational
• By 2033: Full implementation of the CBS reform is expected

These rules have a broad reach and apply to:

• Non-resident digital platforms serving Brazilian customers
• Online marketplaces and intermediaries
• Platforms with integrated payment functionality
• Businesses facilitating imports of goods or digital services into Brazil
• Financial institutions involved in transaction settlement

With obligations starting from August 2026, platforms should prioritise:

• Transaction data capture and reporting readiness
• Compliant invoicing capability (including consolidated billing)
• Payment system updates for split payment
• Supplier onboarding and verification controls

Dominican Republic

Six-month extension for mandatory eInvoicing

The Dominican Republic has granted a six-month extension to its mandatory eInvoicing rollout for certain taxpayers.

Announced by the General Directorate of Internal Taxes (DGII) on 6 May 2026, the extension applies from 15 May 2026 and is designed to give smaller businesses more time to prepare.

The extension applies automatically to micro, small and medium-sized enterprises (MSMEs) and non-classified taxpayers. No application or formal request is required.

The DGII has emphasised that, once the six-month extension expires, taxpayers who have not implemented eInvoicing will be considered non-compliant and may be subject to the penalties established under Law No. 32-23 on Electronic Invoicing.

This is a short-term delay, not a change in direction. Affected taxpayers should use the additional time to:

• Ensure alignment with DGII requirements
• Implement compliant eInvoicing solutions
• Test invoicing and reporting processes

India

GSTN finalises new e-Way Bill API requirements

India has confirmed updates to its e-Way Bill (EWB) system, with the Goods and Services Tax Network (GSTN) releasing final API specifications on 17 June 2026. These changes build on the initial framework announced in May2026 and will go live from 1 August 2026.

Mandatory “Ship-To GSTIN” in specific transactions

For Bill-To/Ship-To transactions, capturing the Ship-To GSTIN (Goods and Services Tax Identification Number) is now conditionally mandatory.

Key requirements:

• The Ship-To GSTIN must be provided where applicable
• If the consignee is unregistered, “URP” (Unregistered Person) must be used
• System validations will ensure:
  • The GSTIN is valid
  • The Ship-To and Bill-To GSTINs are different

Businesses must update data capture and validation rules to avoid EWB generation failures.

Introduction of E-Way Bill closure functionality

GSTN has introduced a facility to voluntarily close an e-Way Bill in defined scenarios.

• Closure can be performed by:
  • Supplier
  • Recipient
  • Transporter or the authorised user
• Available via the portal (EWB-wise or date-wise) or through API
• API submissions require:
  • EWB number
  • Closure date
  • Remarks

A mobile-based closure option is also available, where a number is provided at the time of EWB generation.

Implementation timeline

• June 2026: API updates released in Sandbox for testing
• 1 August 2026: Mandatory rollout in Production

All stakeholders are requested to complete the necessary changes within their systems before the production rollout.

All ERP vendors, GSPs, ASPs, and system integrators are advised to:

• Review the updated API specifications available in the Sandbox environment.
• Perform comprehensive testing using the Sandbox APIs.
• Implement all necessary application and configuration changes to ensure full compliance and production readiness before 1 August 2026.

Moldova

VAT registration threshold increased

Moldova has raised its VAT registration threshold, easing compliance for smaller businesses.

Under Law No. 12 of 19 February 2026, the threshold for mandatory VAT registration has increased from MDL 1.5 million to MDL 1.7 million.

The revised threshold entered into force on 1 March 2026 and applies to taxable persons when determining whether they are required to register for VAT in Moldova. Businesses should continue to monitor turnover to ensure timely registration as they approach the new threshold.

Philippines

New digital VAT guidance and online registration display rules

The Philippines has introduced new compliance requirements for online businesses and clarified how VAT applies to digital services. Two circulars issued by the Bureau of Internal Revenue (BIR) in 2026 set out these changes.

Mandatory display of registration for online sellers

From 29 April 2026 (RMC No. 38-2026):

• Online sellers of goods and digital service providers must display proof of tax registration on their websites or platforms
• This applies to businesses operating via e-commerce sites, marketplaces or any online channel

To address data privacy concerns, the BIR has introduced a Registration Seal Badge as an alternative to displaying full registration details.

VAT rules clarified for digital services

Further guidance was issued on 2 June 2026 (RMC No. 59-2026) covering the 2025 VAT regime for digital services.

• Non-resident Digital Service Providers (DSPs) must register and file VAT returns, even if their services are VAT-exempt
• VAT-exempt digital services must still be reported as VAT-exempt sales in the applicable VAT returns.

The Circular includes detailed guidance for common digital business scenarios, including:

• Business-to-Business (B2B) Transactions: Philippine customers apply the reverse charge and remit 12% VAT
• Marketplaces: Where platforms collect VAT in advance, they are responsible for filing and remitting VAT on B2C sales
• Short-term accommodation platforms: VAT of 12% applies to both listing fees and booking commissions or service fees charged for each successful booking
• Online advertising services: Taxable in the Philippines where the customer is based locally (some services may be zero-rated)
• Digital payment facilitation services: Subject to VAT where they enable digital transactions

What this means

• Online businesses must ensure visible proof of registration
• Digital platforms and non-resident providers face expanded VAT reporting obligations
• Marketplaces in particular may be responsible for VAT collection and remittance

These updates strengthen enforcement of VAT on digital services and increase transparency across the digital economy, with a clear focus on platform accountability and consistent reporting.

Philippines

New taxpayer portal for large taxpayers

The Philippines’s Bureau of Internal Revenue (BIR) has launched a new digital Taxpayer Portal to streamline tax compliance for large taxpayers.

Announced on 26 May 2026, the portal is now in pilot phase for businesses registered with the Large Taxpayers Service.

The Taxpayer Portal is a secure digital platform designed to provide taxpayers with a centralised, single-view access to their tax information and compliance records. Users can:

• View their current taxpayer registration information
• Track filed returns and tax payments
• Receive reminders for upcoming filing and payment deadlines

The initial rollout of the Taxpayer Portal is limited to large taxpayers registered with the BIR. Other taxpayer groups are not yet included at this stage.

For assistance with portal enrolment, technical issues, or concerns regarding the accuracy of information displayed in their taxpayer account, taxpayers are advised to contact the relevant Large Taxpayers Office or Division where they are registered.

This pilot marks a step towards more digital, streamlined VAT compliance in the Philippines, with wider rollout likely to follow.

Sri Lanka

National eInvoicing system moves into pilot phase

Sri Lanka has introduced a national eInvoicing system as part of the 2026 Budget, marking a shift towards near real-time VAT reporting.

The system connects taxpayers’ Enterprise Resource Planning (ERP) systems directly to the Inland Revenue Department’s Revenue Administration Management Information System (RAMIS) via API, ensuring near real-time reporting of transactional data.

What’s changing

• Invoice data is transmitted automatically from ERP systems to RAMIS
• VAT schedules (including output tax, zero-rated supplies and credit/debit notes) are auto-submitted
• Duplicate manual uploads are no longer required where API transmission succeeds

Purchase data pre-populated

• Supplier data is automatically reflected in the buyer’s VAT records
• Businesses must review and approve records before claiming input VAT
• Bulk approvals are allowed (up to 5,000 records)

Corrections cannot be made by editing submitted data. Instead, businesses must issue credit or debit notes.

Rollout timeline

• 2026 (ongoing): Pilot phase for selected exporters (e.g. garment and tea sectors)
• By end of 2026: Full API integration expected
• Phase 1: VAT-registered exporters
• Phase 2: All VAT-registered taxpayers

What this means

• Greater automation, but stricter data accuracy requirements
• Reduced manual reporting, with real-time visibility for tax authorities
• Increased reliance on ERP system integration

Businesses should begin preparing for API integration and ensure their invoicing and VAT processes can support real-time reporting and system validation.

Sri Lanka

Proposed VAT changes to thresholds and financial services

Sri Lanka has proposed key VAT changes that would expand the tax base and increase the rate on financial services.

Published on 29 April 2026 in a Value Added Tax (Amendment) Bill, the measures are expected to take effect from 1 July 2026, subject to enactment.

Lower VAT registration thresholds

The proposal reduces the thresholds for mandatory VAT registration:

• 9 million per quarter (down from LKR 15 million)
• LKR 36 million per year (down from LKR 60 million)

These changes are intended to broaden the VAT net by bringing a larger number of taxpayers within the scope of VAT registration requirements.

Higher VAT rate for financial services

The VAT rate on financial services is proposed to increase from 18% to 20.5%.

What this means

• Businesses near the new thresholds should monitor turnover closely
• Financial service providers should assess the pricing and compliance impact of the higher rate

United Kingdom

Acceleration of customs duty reform for low-value imports

The UK is accelerating planned customs reforms for low-value imports. Goods valued at £135 or less will become subject to customs duties from October 2028, six months earlier than previously planned.

What’s changing?

• The current relief for low-value imports will be removed sooner
• More low-value goods will fall within the scope of customs duties and VAT controls

The measure forms part of a broader package of reforms aimed at strengthening compliance with UK VAT rules and ensuring fair competition between online and high street retailers.

The accelerated implementation is intended to:

• Support fair competition between online sellers and UK high street retailers
• Ensure consistent treatment of domestic and cross-border sales
• Improve tax collection on imported goods

This change aligns with broader UK measures aimed at increasing online marketplace responsibility for VAT on domestic sales.

What this means for businesses

• Importers and online sellers should review pricing and supply chain models
• Marketplaces may face increased compliance responsibilities
• Systems may need updating to reflect duty and VAT treatment for low-value goods

United Kingdom

Consultation on mandatory Direct Debit for VAT and PAYE Payments

The UK Government has launched a consultation on requiring Direct Debit as the default payment method for VAT and Pay As You Earn (PAYE).

Opened on 23 June 2026, the proposal forms part of HMRC’s wider push to automate tax collection and improve payment compliance.

Some key features of the proposal include:

• Mandatory automation of tax payments: HMRC would be authorised to automatically collect VAT and PAYE liabilities directly from taxpayers’ bank accounts via Direct Debit. The measure could affect approximately 2.4 million taxpayers, including individuals, sole traders and incorporated businesses.
• Elimination of manual payment methods: If implemented, the policy would remove most existing payment options for standard tax liabilities, including bank transfers, card payments, cheques, and cash payments at banks.
• Some exemptions include:
  • Digitally excluded taxpayers
  • Overseas businesses without UK bank accounts

Proposed compliance and enforcement

Two potential approaches are under consideration:

• Penalties for not using Direct Debit (even is payment is on time) , and/or
• Timing-based incentives, such as restricting existing payment deadline extensions to Direct Debit payments only.
• Transactions exceeding £20 million in a single liability would be excluded due to system limits

The consultation period will last 8 weeks, from 23 June 2026 to 16 August 2026.

This is currently in the policy design phase (Stage 2), during which stakeholder feedback will be used to refine the proposal prior to legislative drafting (Stage 3).

What this means

• A significant shift towards automated tax payments
• Less flexibility in how VAT and PAYE are paid
• Potential system and cash flow impacts for businesses

United Kingdom

Consultation on extending marketplace VAT liability

The UK is considering extending VAT liability for online marketplaces to cover domestic sales by UK businesses.

Launched by HMRC on 23 June 2026, the consultation builds on the 2021 rules that made marketplaces responsible for VAT on certain sales by overseas sellers.

What’s being proposed

• Online marketplaces would become responsible for VAT on UK domestic sales of goods and services they facilitate
• Scope includes retail sales and sectors such as takeaway food

HMRC believes VAT non-compliance remains an issue across both overseas and UK sellers, creating:

• Unfair competition for compliant businesses
• Disadvantages for high street and online retailers following the rules

The consultation seeks views on the proposed design of the new rules, including measures to minimise the impact on businesses that are not required to register for VAT.

The consultation is open for eight weeks, from 23 June 2026 until 18 August 2026.

Following the consultation, the government will publish a summary of responses and outline its proposed next steps in the usual way.

Work with indirect tax experts

Navigating global indirect tax doesn’t have to be complicated. At Fintua, our dedicated team brings clarity to compliance. Whether you’re expanding into new markets or streamlining existing obligations. We combine expert insight with tailored technology to support businesses in a digital-first landscape. Whatever the jurisdiction, whatever the challenge – we’re ready. 

Subscribe to our newsletter

Stay informed about the latest VAT news, trends and topics from around the globe with our monthly newsletter. Each month, we deliver insightful updates straight to your inbox, helping you stay ahead of the curve.