VAT Rate Round Up

International VAT Rate Round Up: January 2025

The January edition of our International VAT Rate Round Up highlights the latest updates from Canada, Ecuador, Estonia, Russia, Slovakia, and Turkey.

Canada

In an official briefing issued at the end of November, the government proposed a full and temporary relief from the GST/HST on holiday essentials, including groceries, restaurant meals, drinks, snacks, children’s clothing, and gifts, from December 14, 2024, to February 15, 2025.

Businesses are expected to remove the GST/HST on qualifying goods, such as:

  • Children’s clothing, footwear, diapers, car seats, and toys.
  • Books, magazines, and newspapers.
  • Christmas trees.
  • Food and beverages.
  • Jigsaw puzzles and video games.

A detailed list of qualifying goods is available on the Department of Finance Canada website.

Ecuador

The President has ordered the extension of the temporary VAT rate increase from 13% to 15% until the end of 2025 through Executive Decree No. 470.

In April, the standard VAT rate was raised from 12% to 13%, with a temporary increase to 15% set to last until the end of 2024.

This extension now extends the higher rate through 2025.

The Executive Decree will come into effect upon its publication in the Official Gazette.

Adding to this, in Executive Decree No. 482, issued on December 13 2024, the President announced a reduction of the general VAT rate to 8% for all tourist services provided during the Christmas and New Year holidays, specifically on December 25 and from January 1 to January 5.

The activities defined as tourist services for which the VAT rate reduction applies are:

  • Accommodation.
  • Food and beverage service.
  • Transportation primarily dedicated to tourism, including air, sea, river, land transport, and vehicle rental for tourism purposes.
  • Operations where travel agencies provide their own transportation.
  • Intermediation services, including tourist agencies, event organizers, and those managing congresses and conventions.
  • Casinos, game rooms (e.g., bingo-mechanical), racetracks, and amusement parks.

Estonia

A proposal (539 SE) to amend the VAT Law has been introduced to the Riigikogu. The proposed changes include adjustments to VAT rates for press publications and foodstuffs.

Under the current law:

  • Foodstuffs are taxable at the standard VAT rate of 22%.
  • Starting in January 2025, press publications are set to be taxed at 9%.
  • The 5% VAT rate will not apply.
  • The 539 SE draft proposes that press publications be taxed at 5%, rather than the expected 9%.

In September 2024, another draft proposal (492 OE) was submitted, which included a 5% VAT rate for foodstuffs as well as for restaurant and catering services.

On 7 November, Bill 492 OE was rejected at its first reading.

Russia

During a meeting with government members in mid-October, the President instructed the extension of the 0% preferential VAT rate for hotels until the end of 2030.

Currently, this provision is set to remain in effect until 30 June 2027. Taxpayers providing services for temporary accommodation in hotels and other tourism-related facilities are eligible to apply the zero VAT rate.

The necessary amendments to the tax law must be made by 1 April 2025.

Slovakia

On 23 November 2024, the Ministry of Finance published Guide No. 7/DPH/2024/IM, which includes frequently asked questions (FAQ) on the application of VAT rates for restaurant services starting in January 2025.

The following clarifications were provided:

  • Prepared or unprepared food consumed on the restaurant premises will be taxed at a reduced VAT rate of 5%.
  • Non-alcoholic beverages and beverages with an alcohol content of up to 0.5%, consumed on the restaurant premises, will be taxed at 19%.
  • Alcoholic beverages with an alcohol content of more than 0.5% will be taxed at the standard rate of 23%.
  • Take-away food will be taxed at 19%.
  • Food sold at stands during cultural and sporting events, festivals, fairs, and markets will be taxed at 19%.

For food to be considered as consumed on the restaurant premises, supporting services must be provided, such as space for consumption, washable dishes, cutlery, furniture (tables, chairs), toilets, changing rooms, etc.

Turkey

Decision Number 9126: On 13 November 2024, the Turkish president issued a decision to expand the list of goods that are subject to the 10% VAT rate.

Newly Added Items:

  • Foods for special medicinal purposes.
  • Active substances in the composition of medicinal products for human use.
  • Raw materials used in the production of active substances.

The decision became effective the day after it was published in the Official Gazette, which was on 14 November 2024.

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International VAT Rate Round Up: December 2024

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