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2016 VAT rate changes

  • Jan 3, 2016 | Richard Asquith

2016 VAT rate changes

Below is a summary of the main VAT and GST rate changes around the world in 2016.

2016 EU VAT rate changes

The only major change in EU VAT rates was the long-promised reduction in the Romanian VAT rate from 24% to 20%. It will fall again to 19% in 2017 if the economy continues to improve. Poland and Italy both delayed their proposed cuts and rises, respectively, till 2017.

Reduced VAT rates were raised in a number of European Union member states. Austria created a new 13% rate, and moved hotel accommodation up from April 2016. Belgium raised its reduced VAT rate on public supplies of electricity to help pay for a cut in labour taxes. Slovakia did manage a cut in its reduced VAT rates on food.

The disparity on VAT rates between printed and e-books remains a contentious issue. France was forced into raising its rate from 5.5% to 20% following a March 2015 European Court of Justice (ECJ) ruling that e-books should be subject to the higher, standard VAT rate. Italy has challenged this by cutting its e-book VAT rate from 22% to 4%. Poland has also asked the ECJ to review its decision.

Global VAT rate changes in 2016

Norway raised its reduced VAT rate on hotels and public transport to pay for a corporation tax rate cut.  Albania gave its hotel industry a boost with a reduced VAT rate.

Sri Lanka reshuffled its VAT rates, including a new, higher standard rate of 12.5%. Brazil hiked its ICMS (VAT on financial services transactions) in a bid to back-stop falling tax revenues.

India looks set to miss its latest deadline of 1 April 2016 for the revamp of its antiquated VAT regime with the imposition of a simplified Goods and Services Tax. The best hope of the implementation date of the much-anticipated new GST regime is late 2016 or even 2017. Similarly, Egypt faces another delay on the withdrawal of its sales tax for a modernised VAT system. Puerto Rico has also stalled on a VAT implementation, instead hiking its existing sales and use tax from 7% to 11.5%.  Fiji passed a VAT rate cut to 9%.  Trinidad & Tobago also has plans to reduce its VAT rate from 15% to 12.5% in February.

China looks set to complete the 3-year reform of its VAT system by July 2016.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara