These countries come with a new VAT law on January 1, 2026

Bhutan

• Flat 5% GST Rate:
  • Applies to most goods and services, including electricity
  • Zero-rated or exempt: Rice, salt, cooking oil, sanitary pads, wheelchairs, health, education, financial services, and exports
• Digital Services Tax:
  • Foreign providers of digital services must register and charge GST on sales to Bhutanese consumers
• Registration Threshold:
  • Businesses with annual turnover above BTN 5 million must register for GST
• Input Tax Credit:
  • Businesses can deduct input GST paid on purchases, improving tax neutrality
• Failed Tech Platform Replaced:
  • Original Bhutan Integrated Taxation System (BITS) was scrapped after delays and cost overruns
  • A new system, BITS 2, is being developed by a New Zealand firm with a budget over USD 12 million
• Legislative Approval:
  • The GST (Amendment) Bill 2025 was passed by Parliament and awaits Royal Assent
• Appeals & Oversight:
  • Tax disputes will be handled by a Review Board under the Ministry of Finance, not an independent tribunal
  • New provisions include immunity for witnesses and clearer appeal routes to the Royal Court of Justice

Brazil

• Dual VAT Model:
  • CBS (Contribuição sobre Bens e Serviços) – federal VAT replacing PIS and Cofins
  • IBS (Imposto sobre Bens e Serviços) – state/municipal VAT replacing ICMS and ISS
  • IS (Imposto Seletivo) – new excise tax replacing IPI, targeting goods harmful to health/environment
• Phased Rollout (2026–2033):
  • 2026: Pilot rates of 0.9% CBS and 0.1% IBS
  • 2027: PIS, Cofins, and IPI phased out
  • 2029: ICMS and ISS begin phase-out
  • 2033: Full implementation with combined VAT rate around 28%
• Split Payment Mechanism:
  • Taxes automatically withheld and remitted at the time of transaction settlement — reducing fraud and easing compliance
• Special Regimes & Exemptions:
  • Zero-rated: Basic food basket, select medicines
  • Reduced rates: Education, public transport, healthcare (40% of standard rate)
  • Exempt sectors: Public transport, artistic/journalistic services
• Real-Time Compliance:
  • Mandatory electronic invoicing
  • Tax reporting integrated with ERP systems
  • Credits and refunds streamlined for excess input VAT
• Destination-Based Taxation:
  • VAT applies where goods/services are consumed, aligning Brazil with global norms

China

• Replaces the 1994 Provisional VAT Regulations
• Introduces clearer definitions for taxable transactions, deemed sales, and non-taxable items
• Retains the three-tier VAT rate structure: 13%, 9%, and 6%
• Codifies the excess input VAT refund system
• Aligns with international standards by applying the place-of-consumption principle for services

Italy

Italy will launch a new consolidated VAT Code on January 1, 2026, streamlining decades of fragmented legislation:

• Unifies Presidential Decree No. 633/1972 and Legislative Decree No. 331/1993 into one code with 171 articles
• Aligns with EU VAT Directive (2006/112/EC) for consistency
• Digital export documentation required via AES (Automated Export System)
• E-invoicing fully integrated into VAT law, including:
  • Daily receipt reporting
  • Pre-filled VAT returns
• Clarifies VAT rules for digital services, including streaming events
• Simplifies deduction rules and harmonizes treatment of mixed-use goods

Kazakhstan

Kazakhstan has approved a new Tax Code that will take effect on January 1, 2026, introducing major VAT changes:

• Standard VAT rate increases from 12% to 16%
• New reduced rates:
  • 5% for medicines and medical services (rising to 10% in 2027)
  • 10% for printed publications
• Expanded exemptions:
  • Free medical care and social health insurance
  • Book publishing and archaeological services
• Lower VAT registration threshold: from 78.6 million to 15 million tenge
• Bank fees become taxable for the first time
• Stricter e-invoicing rules: tax authorities may suspend e-invoices if businesses ignore audit notices

Liberia

Liberia’s Upcoming VAT Regime (2026)

• Standard VAT Rate: 18%, replacing the current 10% GST
• GST Phase-Out: The GST system, in place since 2001, will be abolished entirely
• Regional Alignment: This move fulfills Liberia’s commitment to the ECOWAS VAT Directive C/DIR.3/07/2023, which mandates VAT adoption by all member states
• Key Exemptions: Agricultural products, medical services, and educational services will be exempt from VAT, protecting vulnerable consumers
• Small Business Relief: Enterprises below a certain turnover threshold will be excluded from VAT registration, easing compliance for micro-entrepreneurs
• Implementation Roadmap:
  • Draft VAT law and White Paper completed
  • Public awareness campaigns underway
  • IT systems and tax official training in progress