Global VAT Guide: March 2025

The March edition of the Global VAT Guide features comprehensive updates on VAT regulations and developments from Belgium, Estonia, Italy, Latvia, Slovakia, Spain, Botswana, Chad, Chile, India, Kazakhstan, Philippines, and Sri Lanka.

Belgium

VAT registration forms available online

On 4 February 2025, the Belgian Federal Public Service Finance announced that a set of forms related to VAT registration has been made available on the online tax portal: www.myminfin.be.  

This initiative allows companies and their agents to log into the portal and easily initiate any changes to their VAT registration, ensuring a more streamlined and convenient process for communicating with the Belgian tax authorities. 

The following forms can now be submitted online via the portal: 

• Application for VAT identification (Form 604A) 

• Declaration of modification of VAT registration details (Form 604B) 

• Declaration of cessation of activity (Form 604C) 

These forms aim to simplify VAT-related procedures and improve efficiency in handling registration and changes. Businesses are encouraged to use the online portal to manage their VAT registrations and updates in real-time. 

For more information, please visit www.myminfin.be.  

Estonia

50% deduction on mixed use vehicle-related expense for passenger cars extended

The 50% VAT deduction for purchasing and leasing passenger cars, including expenses related to maintenance, repair, and fuel (for cars not entirely used for business purposes), was initially set to expire on 31 December 2024. 

On 28 March 2024, Estonia submitted a request for a three-year extension of the measure. 

After two requests from the European Commission for additional information, Estonia was notified on 18 October 2024 that the Commission had received all necessary details to consider the extension. 

On 4 February 2025, the Commission issued a proposal decision to extend the measures until 31 December 2027. 

The passenger cars covered by this special VAT deduction measure must meet the following criteria: 

• Maximum authorized weight of no more than 3,500 kg. 

• No more than 8 seats, in addition to the driver’s seat. 

Passenger cars used for certain specific activities are excluded from the restriction on VAT deduction and are treated under the normal VAT rules. 

These include: 

• Cars purchased for resale, hire, or lease. 

• Cars used for the transportation of passengers (e.g., taxis) or goods. 

• Cars used for driving lessons. 

Other EU Member States (including Latvia, Italy, Croatia, Hungary, Poland, and Romania) have also been granted similar derogations regarding the right to deduct VAT for passenger cars.

Italy

Reverse Charge

As part of the 2025 Budget Law, adopted on 30 December 2024, and published in the Official Gazette on 31 December 2024, Italy has introduced significant changes to its VAT law concerning reverse charge mechanisms. 

The primary amendment involves the introduction of a domestic reverse charge on certain labour-intensive services rendered to companies involved in the transport, handling, and logistics of goods. 

The amendment modifies Article 17, paragraph 6, letter a-quinquies of Presidential Decree No. 633 of 26 October 1972. 

Specifically, the reverse charge will apply to services provided to companies involved in logistics activities, such as the transport and handling of goods. 

Under this new provision, the responsibility for paying VAT on these services will shift from the supplier to the client, meaning that the client will be liable to remit VAT to the tax authorities on behalf of the supplier. 

The full implementation of this reverse charge is contingent on the European Union granting authorization for a derogation under Article 395 of Council Directive 2006/112/EC of 28 November 2006. 

Pending this authorization, the legislation provides an option for taxpayers to voluntarily apply the reverse charge. 

If both the supplier and the client agree, the client can opt to pay the VAT on behalf of the supplier.  

The option, if exercised, will apply for a period of three years and must be formally notified to the Italian tax authorities through a dedicated electronic submission form. 

Previously, the Italian government had proposed extending the reverse charge mechanism to cover all contracted labour-intensive work performed on customers’ premises and capital goods. However, this proposal was rejected by the European Commission due to concerns that it was too broad to effectively combat VAT fraud. 

The current amendment narrows the scope of the reverse charge to focus specifically on the logistics sector, a move that is more targeted and aligned with efforts to address VAT fraud within this industry.  

This shift ensures that the reverse charge mechanism will be applied to a sector that is prone to fraud, without overreaching to other areas that may have been more difficult to manage effectively. 

The introduction of the domestic reverse charge on labour-intensive services in the logistics sector is part of Italy’s broader efforts to modernize its VAT system and combat VAT fraud. 

The option for taxpayers to voluntarily apply the reverse charge provides flexibility while the full implementation of the measure awaits approval from the European Council. Companies in the logistics sector should stay informed about these changes and ensure they are prepared to comply with the new VAT obligations once the measure is fully implemented.

Latvia

50% deduction on passenger cars not wholly used for business purposes extended

As mentioned in the November 2024 newsletter, the 50% VAT deduction for purchasing and leasing passenger cars—including expenses related to maintenance, repair, and fuel (for cars not wholly used for business purposes) was initially set to expire on 31 December 2024. 

Timeline of Changes: 

• 15 May 2024: Latvia requested a three-year extension of the measures. 

• 11 September 2024: The European Commission notified Latvia that it had received all the necessary information to consider the extension request. 

• 23 October 2024: A proposal decision was issued, extending the measures until 31 December 2027. 

On 10 December 2024, the decision was adopted by the European Council. 

Passenger cars covered by the special VAT deduction measure must meet the following criteria: 

• Maximum authorized weight: No more than 3,500 kg. 

• Seats: A maximum of 8 seats, in addition to the driver’s seat. 

Passenger cars used for certain specific activities are exempt from the restriction on VAT deduction and are treated under the normal VAT rules. 

These include: 

• Cars purchased for resale, hire, or lease. 

• Cars used for the transportation of passengers (e.g., taxis) or goods. 

• Cars used for driving lessons. 

• Cars used for guard or emergency services. 

• Cars used as car sales demonstration vehicles. 

Slovakia

Clarification on the deadline for Foreign VAT Refunds

The Financial Directorate of the Slovak Republic has published a summary of updates to the VAT Act under 1/VAT/2025/I, effective from 1 January 2025. 

The deadlines for Foreign VAT refunds remain as follows: 

• EU businesses: 30 September. 

• Non-EU businesses: 30 June. 

A clarification was issued that if the deadline falls on a non-working day, it will remain on the same day and will not be extended to the first working day. 

Changes have also been made to the below: 

• Deduction rules relating to: 

• Illegal appropriation of goods (e.g., stolen goods). 

• Investment property. 

• Real estate investment property. 

• Movable capital assets. 

• Exemption for Armed Forces: A specific exemption has been introduced for armed forces. 

• VAT Rate Changes: 

• The 5% VAT rate has been extended to include the following goods: 

• Certain flours. 

• Food powder. 

• Roots. 

• Soya products. 

• Oil seeds. 

Spain

Regulations on the sanctioning procedure for violations of INTRASTAT’s statistical obligations

On 23 December 2024, the Spanish government approved Royal Decree 1305/2024, which introduces a new framework for sanctioning non-compliance with INTRASTAT obligations related to international trade statistics within the European Union (EU). 

This decree aims to improve the accuracy and transparency of trade statistics, ensuring that businesses fulfil their reporting duties under EU regulations. 

The new framework will come into effect on 1 February 2025, marking a shift in how Spain sanctions violations concerning INTRASTAT reporting. 

The new decree outlines updated sanctions and penalties for businesses that fail to comply with their reporting obligations under INTRASTAT. 

These sanctions are expected to be more stringent, aiming to ensure a higher level of adherence to trade reporting regulations. 

Companies involved in international trade within the EU will need to ensure compliance with INTRASTAT reporting requirements to avoid penalties. This will involve timely and accurate submission of trade data to the Spanish authorities. 

The Spanish government will have a clearer and more robust mechanism for enforcing compliance with EU trade data regulations, contributing to more reliable trade statistics across the EU. 

Botswana

Plans to introduce VAT on digital trade

Businesses engaged in intra-EU trade should review their processes to ensure they are prepared for the changes and can comply with the updated regulations from 1 February 2025. The Spanish tax authorities will likely issue further guidance to assist businesses in understanding the new requirements and penalties. 

In a move to modernize the country’s taxation system and align with global trends, the Botswana Unified Revenue Service (BURS) has announced the introduction of Value Added Tax (VAT) on digital trade, effective 1 September 2025. 

This initiative was highlighted in the 2025 Budget Speech and marks an important step toward ensuring that both traditional and digital businesses are subject to the same tax obligations. 

The decision to implement VAT on digital trade aims to broaden the VAT tax base within Botswana’s rapidly expanding digital economy. 

As the digital marketplace continues to grow, it has become essential for the country to update its tax policies to reflect the new business landscape. 

The introduction of VAT will ensure that digital service providers, who have previously operated outside the VAT system, contribute to the national revenue in the same way that physical businesses do. 

The Botswana government aims to create a fair taxation environment where both traditional businesses and digital enterprises are equally taxed. This move ensures that all businesses, regardless of their operational model, face the same tax obligations, contributing to a more balanced and competitive market. 

By taxing digital trade, Botswana is set to increase its national revenue, which can be reinvested into vital public services and infrastructure development. 

Traditional businesses and digital platforms will now operate under the same tax rules, creating a more level playing field in the market. 

The move also encourages digital businesses to be more transparent and compliant with national tax regulations, fostering a more responsible and structured economic environment. 

As Botswana moves toward a fully integrated digital economy, the introduction of VAT on digital trade will not only ensure fairness in taxation but also support sustainable growth. With the implementation scheduled for September 2025, BURS is expected to work closely with stakeholders in the digital sector to ensure a smooth transition and provide the necessary guidance to help businesses understand and comply with the new tax regulations. 

This initiative marks a significant milestone for Botswana’s tax system, aligning with global best practices and paving the way for a more inclusive economic future. 

Chad

Changes to the Fiscal Code

On 6 December 2024, the Chad National Transitional Council adopted the Finance Act, which introduced several important changes to the Fiscal Code. 

These changes came into effect starting 1 January 2025 and include new provisions concerning Value Added Tax (VAT) on digital platforms. 

1. VAT on Digital Platform Transactions: 

Transactions carried out through both foreign and local e-commerce platforms are now subject to VAT. 

This includes not only the direct transactions (sales of goods and services) but also commissions collected by the operators of these platforms. 

2. VAT Liability for Platform Operators: 

VAT is due to be paid by the operators of e-commerce platforms, who must be included on a list published by the Chad tax administration. 

The tax authority will maintain a list of approved operators, and these operators are responsible for ensuring compliance with VAT obligations. 

3. Registration and Payment via e-Tax Portal: 

E-commerce platform operators are required to submit their registration and payment application to the Chad tax authority through the official e-Tax portal. This provides a digital platform for processing tax matters, ensuring ease of compliance. 

4. Consequences of Non-Compliance: 

Failure to comply with these VAT obligations will result in severe consequences. Specifically, non-compliant operators will face a suspension of access to their platform throughout the entire territory of Chad. This is a significant measure designed to enforce compliance. 

5. Implementing Regulation: 

The Finance Act outlines that a future implementing regulation will detail the practical steps and procedures for implementing these new provisions. This will clarify how the VAT system will be applied to digital platform transactions, including any specific processes or deadlines for compliance. 

Both foreign and local operators who facilitate transactions on digital platforms in Chad must ensure they are registered with the Chad tax authorities, file VAT returns through the e-Tax portal, and pay VAT as required. 

Failure to comply will result in platform suspension. 

The new VAT rules will likely affect the pricing of digital goods and services on e-commerce platforms, as VAT is now applicable to both goods sold and commissions on transactions. 

The Chad tax administration will oversee the implementation of these changes and publish a list of compliant e-commerce operators: 

This update to Chad’s Fiscal Code marks a significant step in regulating VAT on digital services and e-commerce transactions. It aims to ensure fair taxation of digital businesses operating in the country, with strict penalties for non-compliance. 

Chile

Obligation to print the e-invoices and e-receipts to end customers from 1 May 2025

On 17 January, the Chilean Internal Revenue Service (SII) issued Resolution No. 12, outlining new requirements for the delivery of printouts of e-invoices and e-receipts to end customers. 

These obligations will take effect on 1 May 2025. 

• Payments by Cash or Bank Transfer: 

• The printed representation of the e-receipt must be delivered to the customer. 

• Payments by Debit or Credit Cards: 

• The printed representation of the e-receipt and/or the proof of payment must be delivered to the customer. 

The option to send a virtual presentation of the e-receipt and/or proof of payment via electronic means (such as WhatsApp, email, or other platforms) will remain available. 

However, this virtual presentation does not replace the mandatory obligation to provide a printed copy. 

Taxpayers who do not have devices to print the required documents or have not yet adapted their systems to issue the print-outs will be allowed a transitional period until 1 March 2026. 

During this period, such taxpayers must continue to comply by sending the virtual presentation (via email, SMS, mobile apps, or other electronic means) of the e-receipt and/or proof of payment.

India

Finance Bill 2025 changes to GST

On 1 February 2025, the finance minister presented the Finance Bill 2025, which includes several significant amendments to the Goods and Services Tax (GST) regulations. 

These changes are designed to streamline processes, enhance compliance, and introduce new mechanisms to better manage GST operations. 

The key amendments are as follows: 

1. Input Service Distributors and Reverse Charge on Intra-State Supplies 

A major amendment introduced in the Finance Bill 2025 is the clarification on the distribution of Input Tax Credit (ITC) by Input Service Distributors (ISDs). Under the new provision, ISDs will be responsible for distributing ITC in the case of reverse charge on intra-state supplies. 

This introduces a new obligation for businesses to submit the reverse charge invoice to the Input Tax Distributors, as outlined in Clause 121 of the Finance Bill. The change aims to enhance the accuracy and efficiency of tax credit allocation, ensuring that businesses comply with reverse charge regulations. 

2. Appeal Process for Fines 

The Finance Bill 2025 also revises the process for appealing fines under GST regulations. In cases where a fine is imposed without any demand for unpaid taxes, a 10% deposit of the fine amount will now be required as a condition to file an appeal. 

This provision is intended to ensure that appeals are made with greater consideration and seriousness, potentially reducing frivolous appeals and improving the overall efficiency of the tax system. 

3. Introduction of Track and Trace Mechanism 

The Bill introduces a Track and Trace mechanism for specific goods and certain classes of persons. This will allow authorities to monitor the movement of goods more effectively. 

The new mechanism will also involve the implementation of unique identification markings for these goods. Failure to comply with the Track and Trace requirements will result in penalties, aiming to improve accountability and reduce the risks of tax evasion and fraud within the supply chain. 

4. Clarification on Goods Stored in Warehouses or Special Zones 

The Finance Bill 2025 provides further clarification on the treatment of goods stored in warehouses or special zones before export clearance or entry into the domestic tariff area. 

According to the new provisions, goods stored in these areas will not be treated as a supply of goods or services for GST purposes. This clarification ensures that such goods are not subject to unnecessary taxation or supply regulations while they are in transit or awaiting clearance. 

These amendments will come into effect once the Finance Bill 2025 is enacted as law. Businesses and stakeholders will need to prepare for the implementation of these changes and ensure compliance with the new provisions as soon as they are formally adopted. 

The changes proposed in the Finance Bill 2025 reflect the government’s ongoing efforts to enhance the GST system, improve compliance, and streamline processes for businesses. Companies are advised to familiarize themselves with these amendments and begin preparations for their implementation.

India

New Invoice Management System (IMS)

In October 2024, the GST portal introduced a new functionality called the Invoice Management System (IMS), designed to streamline the process for taxpayers in matching their records/invoices with those issued by suppliers to ensure accurate Input Tax Credit (ITC) claims. 

The IMS enables taxpayers to review the genuineness and authenticity of received invoices. 

When suppliers save an invoice in GSTR-1, IFF, or 1A, the same invoice is automatically reflected in the recipient’s IMS dashboard. 

Upon receiving the invoice in IMS, the recipient has the following options: 

• Accept: If the recipient deems the invoice correct, they can accept it. 

• Reject: If there are discrepancies or issues, the recipient can reject the invoice. 

• Pending: If the recipient needs more time to verify the invoice, they can leave it pending. 

If no action is taken on an invoice within IMS, the system automatically deems the invoice as accepted, and it will be included in GSTR-2B. 

If a supplier amends any invoice details in GSTR-1 before filing, the updated invoice will replace the original invoice in IMS, regardless of whether the recipient has taken any action on the original one. 

At the time of GSTR-2B generation, only the filed invoices/records by the supplier will be considered for the computation of ITC. The recipient will be provided with a draft GSTR-2B, which they can review and take action on (accept, reject, or keep pending) until GSTR-3B is filed. 

GSTR-2B for the subsequent month will not be generated until GSTR-3B is filed for the previous month. 

Invoices in IMS are categorized based on the action taken by the taxpayer: 

• No Action Taken: These invoices will be treated as deemed accepted when GSTR-2B is generated. 

• Accepted: Accepted invoices will be included in the GSTR-2B for ITC computation. 

• Rejected: Rejected invoices will not be considered for GSTR-2B generation. 

• Pending: Pending invoices will not be considered in the current month’s GSTR-2B and will carry forward to the following month for further action. 

Currently, the use of IMS is optional. However, there are ongoing discussions about making its use mandatory, initially for large taxpayers. 

Kazakhstan

Proposed changes in Tax code

On 11 February, the Kazakhstan Government announced that it is considering amendments to the Tax Code. 

The proposed changes include: 

• Increase in the Standard VAT Rate: The VAT rate is proposed to rise from the current 12% to 16%. 

• Introduction of a Reduced VAT Rate: A 10% reduced VAT rate is being considered. 

• Expansion of VAT Exemption Scope: The government plans to extend VAT exemptions to include agricultural products. 

• Lowering of VAT Registration Threshold: The threshold for VAT registration is proposed to decrease from 80 million tenge to 15 million tenge. 

To facilitate discussions, working groups will be established and sent to various regions to engage with businesses about the amendments. 

The government is committed to open dialogue and will consider all proposals before making a final decision. 

Philippines

Digital services

The Bureau of Internal Revenue (BIR) published Revenue Regulation (RR) No. 03-2025 on 17 January 2025, which outlines the procedures for collecting and paying Value-Added Tax (VAT) on digital services in the Philippines. 

The regulation will take effect within 15 days from its publication. 

The regulation defines “Digital Services” as services provided over the internet or any other electronic network, utilizing information technology, and where the supply of the service is mostly automated. It includes, but is not limited to, the following categories: 

• Online search engines 

• Online marketplaces 

• Cloud services 

• Online media and advertising 

• Online platforms 

• Digital goods, which include intangible goods delivered or transferred in digital form (e.g., sounds, images, data, facts), such as: 

• Digital content purchases (e.g., e-books, music, videos, software, applications, digital media, e-games, online courses) 

• Subscription-based supplies of content (e.g., news, music, streaming media, online gaming, online courses) 

• Digital art 

• Software services and maintenance (e.g., anti-virus software, digital data storage) 

• Licensing of content (e.g., access to online content such as publications, journals, software, cloud-based systems) 

• Telecommunication and broadcasting services 

• Virtual assets 

Non-resident DSPs must register via the VAT on Digital Services (VDS) portal within 60 days of the regulation’s effectivity. 

Non-resident DSPs will be subject to VAT on digital services 120 days after the regulation’s effective date. 

Resident DSPs can claim input tax on: 

• The purchase or importation of goods or properties 

• VAT paid on imported goods before customs release 

• Purchase of services, lease, or royalties upon payment 

Non-resident DSPs cannot claim input tax credits. 

Accounting & Record-Keeping, Invoicing Requirements: 

VAT-registered entities in the Philippines must maintain subsidiary sales and purchase journals to record daily transactions. 

This record-keeping requirement does not apply to non-resident VAT-registered DSPs. 

Non-resident DSPs are subject to simplified invoicing requirements. Their invoices must include the following information: 

• Date of the transaction 

• Transaction reference number 

• Identification of the buyer (including the TIN, if any) 

• Brief description of the transaction 

• Total amount, including an indication that the amount includes VAT. 

This regulation aims to regulate VAT collection on digital services provided by both resident and non-resident digital service providers (DSPs) in the Philippines. 

Non-resident DSPs will need to ensure compliance with the new registration and VAT payment requirements, and all DSPs should be aware of the simplified invoicing procedures. 

Sri Lanka

VAT for Non-Resident Providers of Digital Services starts from 1 April 2025

The Sri Lankan Budget for 2025, presented on 17 February 2025, by the Minister of Finance, introduced significant provisions that impact the registration, charging, collection, and filing returns related to VAT on digital platforms. 

These provisions are aimed at regulating the growing trend of e-commerce and digital services, ensuring tax compliance for digital transactions. 

On 21 February 2025, an amendment to the Value Added Tax Act was published. 

Effective from 1 April 2025, non-resident individuals or entities providing electronic services via digital platforms to customers in Sri Lanka will become liable for VAT. This marks an important shift, as it ensures that international digital service providers, such as streaming services, online marketplaces, and cloud providers, contribute to Sri Lanka’s tax revenue. 

The amendment empowers the Commissioner-General to further define and specify the detailed procedures related to the registration, charging, and filing returns concerning VAT for non-resident service providers. 

Some key definitions introduced include: 

• Electronic Platform: The law defines an electronic platform as any procedure in the form of a website or mobile application through which one or more service providers offer services to service recipients. This ensures clarity on what constitutes an online platform subject to VAT. 

• Fixed Place: The definition of a “fixed place” is provided to differentiate between entities with a sufficient degree of permanence and suitable resources (human and technical) to supply or receive services. This helps clarify what constitutes a place of business in Sri Lanka. 

• Non-Resident Person: A non-resident person is defined as any individual or entity occasionally undertaking transactions involving the supply of services but lacking a fixed place of business in Sri Lanka. However, if such a person has an agent acting on their behalf in Sri Lanka, they may still be liable to VAT. 

For Digital Service Providers: Non-resident businesses offering electronic services to customers in Sri Lanka will need to comply with the new VAT requirements, including registration and return filing procedures, by 1 April 2025. 

For the Government: This amendment is part of broader efforts to modernize tax collection and ensure that international businesses contributing to the digital economy in Sri Lanka are taxed appropriately. 

For Customers: Sri Lankan customers using international digital services may notice an increase in the cost of services as the VAT is applied to digital transactions. 

The Sri Lankan government continues to adapt its tax laws to better reflect the realities of the digital economy, ensuring a fair tax system for both residents and non-residents. 

Stay Up to Date with Our VAT Newsletter

To ensure you remain informed about the latest VAT news, trends, and topics from around the globe, subscribe to our VAT Newsletter. Each month, we deliver insightful updates straight to your inbox, helping you stay ahead of the curve.

Partner with Real VAT Experts

With decades of experience in VAT compliance and consultancy, our team at Taxback International stands ready to assist you. We offer comprehensive expertise across all countries and languages where VAT obligations exist.

Explore Cutting-Edge Solutions

In addition to our consultancy services, we’ve developed tailored technology solutions to address the VAT challenges confronting businesses today.

Here’s a glimpse of what we offer:

Comply: Our VAT Compliance platform ensures seamless adherence to VAT regulations.

VATConnect: Optimize VAT reclaim processes, both foreign and domestic, with our VAT Reclaim platform.

TBI Pay: Simplify cross-border payments using our streamlined technology solution.

Reach out to us today to discover how we can support your business’s VAT needs amidst evolving tax landscapes.