The April edition of our International VAT Rate Round Up highlights the latest updates from Austria, Malaysia, Philippines, Poland, Spain and Switzerland.
This month’s update sees several jurisdictions implementing temporary or proposed VAT rate changes to address inflationary pressures or fund policy priorities, particularly in fuel and essential goods.
Austria
Austria is considering a significant reduction in VAT on selected basic foodstuffs.
On 11 March 2025, a draft bill was submitted for review via the Austrian Federal Legal Information System. The proposal would reduce the VAT rate on certain food items from 10% to 4.9%, subject to approval.
The reduced rate would apply only to the supply and import of specific foodstuffs, including:
- Milk
- Yogurt
- Butter
- Eggs
- Vegetables
- Fruits
- Rice
- Flour
- Pasta
- Bread
- Salt
Restaurant and catering services are explicitly excluded from the scope of the measure.
The proposal is intended to ease cost pressures on consumers and is expected to have wider economic and social impacts. The consultation period closes on 8 April 2026.
If approved, the reduced VAT rate would enter into force on 1 July 2026.
Malaysia
Malaysia has reduced the service tax rate on rental and leasing services.
On 10 March 2026, the Minister of Finance issued Order P.U.(A) 125, amending the First Schedule to the Service Tax (Rate of Tax) Order. The amendment adds rental and leasing services to the list of services subject to a reduced service tax rate, lowering the rate from 8% to 6%.
The Order was published in the Official Gazette on 13 March 2026 and applies retrospectively from 1 January 2026.
Businesses supplying rental or leasing services in Malaysia should review past and current invoicing to ensure the correct rate is applied.
Philippines
The Philippines is considering a reduction of the standard VAT rate from 12% to 10%.
Since autumn 2025, several bills have been introduced in Congress with this objective. The most recent proposal, Senate Bill No. 1916, was filed on 26 February 2026 and passed its first reading on 3 March 2026. It has now been referred to the relevant Committee for further review.
If approved, the reduced VAT rate would take effect 15 days after publication in the Official Gazette.
Previous bills seeking the same VAT rate reduction include:
- Senate Bill No. 1851, filed on 18 February 2026
- Senate Bill No. 1552, filed on 24 November 2025
- House Bill No. 4302, filed on 2 September 2025
At this stage, the proposal remains under legislative consideration, with no confirmed implementation date.
Poland
Poland has introduced a temporary reduction in VAT and excise duties on motor fuels, lowering the VAT rate from 23% to 8%, effective from 31 March 2026 to 30 April 2026.
The measure was announced by the Ministry of Finance and the Ministry of Energy and is intended to offset sharp fuel price increases at petrol stations linked to the ongoing conflict in the Middle East.
The reduced rate of 8% applies to the following fuels:
- Motor gasoline (CN 2710 12 45 and 2710 12 49) including blends with compliant biocomponents
- Diesel oils (CN 2710 19 43 and 2710 20 11) including blends with compliant biocomponents.
- Biocomponents qualifying as fuels in their own right and meeting regulatory quality standards, regardless of CN code.
- Fuels for natural gas (wet) combustion engines and other gaseous hydrocarbons (CN 2711, excluding CN 2711 11 00 and 2711 21 00), as well as liquefied gaseous aliphatic hydrocarbons (CN 2901).
An earlier draft proposal had envisaged a longer reduction period, from 15 March 2026 to 30 June 2026, but this was ultimately shortened.
Spain
Spain has introduced a temporary reduction in the VAT rate on motor fuels, lowering the rate from 21% to 10%, effective from 22 March 2026 to 30 June 2026.
The measure was announced in Royal Decree-Law 7/2026 (BOE-A-2026-6544), published in Official Gazette No. 71 on 21 March 2026, as part of a package of urgent measures responding to the ongoing conflict in the Middle East.
The reduced rate applies to the supply, import, and intra-Community acquisition of:
- Gasoline
- Diesel
- Biofuels intended for use as fuel
The reduced rate will apply until 30 June 2026, after which the standard VAT rate is expected to resume unless further measures are announced.
Switzerland
Switzerland is consulting on a temporary increase in the standard VAT rate.
The Swiss Federal Council has opened a public consultation on a temporary proposal to raise the standard VAT rate by 0.8 percentage points, from 8.1% to 8.9%, for a period of ten years. The increase is expected to take effect from 1 January 2028, if approved.
The measure aims to generate additional funding for national security and defence.
At this stage, the proposal is subject to consultation and approval, and no final decision has been taken.
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Authors
Lisa Dowling
Specialising in International VAT Compliance solutions, Lisa brings a wealth of knowledge and insight in her dealings with a host of international clients ranging from start-ups through to multinationals. With 21 years VAT experience behind her, Lisa has managed VAT compliance issues and solutions globally for over 11 years. Fintua have 12,000 + corporate clients in over 109 countries and many of these are members of the Fortune 500.
