- Global VAT Rate Changes: As of August 1, 2025, several countries will implement significant VAT rate adjustments, including Lithuania’s new reduced rate of 12%, the Maldives increasing GST from 8% to 10%, and Andorra raising special VAT rates on luxury goods from 4.5% to 6.5%. Fiji will also introduce a reduced standard VAT rate of 12.5% alongside other reforms to support economic recovery and sustainability.
- Impact on Businesses: The changes will require businesses to adapt their pricing, invoicing, and compliance systems to reflect new VAT rates. Companies must be proactive in updating ERP and tax automation systems, ensuring that all financial departments are trained on the implications of these changes, and maintaining clear communication with clients and suppliers to facilitate smooth transitions.
- Best Practices for VAT Compliance: To navigate these changes effectively, businesses should implement real-time VAT rate monitoring, conduct cross-functional training for relevant teams, document transitional rules, and prepare for cutover protocols. Adopting dynamic compliance processes and automation tools will be essential for minimizing risks and maintaining competitiveness in the evolving VAT landscape.
Source VAT IT Compliance
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