Global VAT/GST Rate Changes in 2025-2026: What Digital Businesses Need to Know

VAT and GST rates are not static. Governments adjust them regularly — sometimes with little notice — and if your tax engine is using hardcoded rates, you are already wrong somewhere. This article tracks every significant rate change and new digital services tax rule from 2025 through early 2026, organized by region. If you sell software or digital services internationally, these changes directly affect what you charge your customers.

European Union: standard rate increases

The EU average standard VAT rate has crept up to approximately 21.8% in 2026. Several member states raised their standard rates in 2025:

Several countries also adjusted which supplies get reduced or standard treatment:

• Belgium: Increased rates on hotel and camping accommodation and non-alcoholic beverages from the 6% reduced rate to 12% (effective March 2026). Originally proposed increases on takeaway meals and sports/cultural events were withdrawn following review by the Council of State
• Netherlands: Moved accommodation services from the 9% reduced rate to the 21% standard rate (January 2026). Camping was excluded from the increase
• Germany: Moving restaurant food from the 19% standard rate to the 7% reduced rate in 2026 (beverages remain at 19%)
• Austria: Increased the small business exemption threshold from EUR 35,000 (net) to EUR 55,000 (gross), effective January 2025. Also implemented the new EU cross-border small business regime (EUR 100,000 EU-wide threshold)

EU cross-border small business regime

A significant new rule took effect on 1 January 2025: businesses established in one EU member state can now benefit from the small business VAT exemption in other member states, provided:

• EU-wide annual turnover does not exceed EUR 100,000
• Local turnover in the target member state does not exceed that country's domestic small business threshold

This is new — previously, the small business exemption only applied domestically. A French micro-business selling to German consumers had to charge German VAT regardless of how small they were. Now they can claim exemption in Germany if they meet both thresholds. This does not apply to businesses established outside the EU.

Asia-Pacific: rate increases and new digital tax rules

Indonesia: 12% VAT (from January 2025)

Indonesia increased its standard VAT rate from 11% to 12% on 1 January 2025. However, the implementation is nuanced: the full 12% rate applies only to luxury goods (vehicles, homes over IDR 30 billion, private jets, yachts). Non-luxury goods and services use an 11/12 calculation base, yielding an effective rate that remains close to 11%.

For digital services, Indonesia already requires non-resident providers to register and collect VAT on B2C digital supplies. The increase applies to these supplies.

Philippines: 12% VAT on digital services (from June 2025)

The Philippines introduced a 12% VAT on digital services supplied by non-resident providers, effective 2 June 2025. This is a new obligation — non-resident platforms (including SaaS providers, streaming services, and cloud platforms) must register with the Bureau of Internal Revenue (BIR) and collect VAT on B2C supplies to Philippine consumers.

Singapore: GST at 9% (from January 2024)

Singapore completed its two-step GST increase, moving from 8% to 9% on 1 January 2024. The Overseas Vendor Registration (OVR) regime requires non-resident digital service providers to register if global turnover exceeds SGD 1 million and Singapore B2C digital sales exceed SGD 100,000.

Japan: platform taxation (from April 2025)

Japan introduced a Platform Taxation system effective April 2025. Specified Platform Operators (SPOs) whose B2C digital sales exceed JPY 5 billion annually now bear the consumption tax liability for digital services sold through their platforms. Direct sellers below this threshold must still register independently.

Brazil: the most ambitious VAT reform in the world

Brazil is replacing five separate indirect taxes (ICMS, IPI, ISS, PIS-PASEP, COFINS) with two new consumption taxes. This is the most significant indirect tax reform currently underway anywhere in the world.

The combined rate is capped at 26.5%, though reference rates suggest the effective burden may land between 26.5% and 28% depending on tax revenue during the transition period. Either way, it would be among the highest consumption tax rates globally. The transition is gradual:

• 2026: Test phase — CBS at 0.9%, IBS at 0.1% (coexisting with the old taxes, not actually collected from compliant taxpayers). Businesses must adjust invoicing systems to reflect IBS and CBS on fiscal documents.
• 2027: CBS fully replaces PIS/COFINS. IPI reduced to zero (except Manaus Free Trade Zone).
• 2029-2032: IBS gradually phases in, replacing ICMS and ISS.
• 2033: Full transition complete. Only CBS, IBS, and a new Selective Tax remain.

Africa and Middle East: expanding digital tax net

The fastest-growing area for new digital services tax obligations is Africa:

• Nigeria: The Nigeria Tax Act 2025 requires non-resident digital service providers to register for VAT, charge it on invoices, and remit to the Nigeria Revenue Service from 1 January 2026.
• Tanzania: Expanded digital services scope in July 2025 to cover online marketplace and network marketing platforms. Simplified non-resident VAT portal has been live since 2023.
• Kenya: Enforcing VAT and Digital Services Tax on non-resident electronic service providers retroactively from January 2021.
• Saudi Arabia: Continues to enforce its 15% VAT on digital services with no threshold for non-resident e-service providers.
• UAE: 5% VAT applies to all digital services with no threshold for non-resident providers.

Latin America: aggressive withholding approaches

Latin American countries are taking a different approach to taxing digital services — rather than requiring foreign companies to register and file, several use withholding mechanisms through financial intermediaries:

• Argentina: 21% VAT on digital services to consumers, collected via financial intermediaries (credit card companies)
• Argentina (income tax): Separately, a 31.5% income tax withholding applies to certain cross-border royalty and license payments — this is not a VAT obligation but an additional tax that may apply alongside VAT
• Colombia: Non-residents can pay either a 10% withholding tax or a 3% rate on digital services income
• Brazil: Proposed a separate 7% Digital Social Tax on gross revenue of major digital platforms (independent of the CBS/IBS reform)

Current EU standard VAT rates (2026)

For reference, here are the standard VAT rates across all EU member states as of January 2026:

For a deeper look at the EU's broader VAT reform agenda, see our guide to ViDA (VAT in the Digital Age). For US SaaS companies navigating these rate changes globally, see our US SaaS global VAT guide.

What this means for your tax engine

If you hardcode tax rates, you are wrong today. The changes documented in this article alone affect dozens of jurisdictions. A modern tax determination engine must:

• Track rate changes by effective date — a transaction on 30 June 2025 in Estonia is at 22%; on 1 July 2025 it's at 24%
• Handle transitional rules — Indonesia's 12% rate with the 11/12 effective rate for non-luxury goods is not something a simple rate table captures
• Support new registration obligations — the Philippines and Nigeria created new obligations in 2025-2026 that didn't exist before
• Adapt to structural reforms — Brazil's dual-VAT system is fundamentally different from the existing five-tax regime

Frequently asked questions

Which EU countries increased their VAT rate in 2025-2026?

Estonia increased from 22% to 24% (July 2025), Finland from 24% to 25.5% (January 2026), Romania from 19% to 21% (January 2025), and Slovakia from 20% to 23% (January 2025). Several other member states adjusted reduced rates or sector-specific rules.

What is Brazil's new VAT system?

Brazil is replacing five consumption taxes with a dual-VAT system: CBS (federal) and IBS (state/municipal). The combined rate is capped at 26.5%. The transition runs from 2026 to 2033.

Did Indonesia increase its VAT rate?

Indonesia raised the headline rate from 11% to 12% on January 1, 2025, but introduced a transitional mechanism where non-luxury goods use an effective rate of 11/12 of 12%, keeping the practical burden close to 11%.

How often do global VAT rates change?

Rate changes happen continuously worldwide. In 2025-2026 alone, dozens of countries adjusted rates, introduced new digital services taxes, or launched structural reforms. A modern tax engine must track effective dates and transitional rules.