Indirect Tax
Germany’s Action plan for Centralized Tax Data, VAT Real-Time Domestic Reporting and AI to Identify Tax Fraud
Excerpts from various sources
An action plan announced on 16 July 2026 by the Federal Finance Minister and Federal Justice Minister to modernize tax enforcement and combat financial crime.
- Introduction of a central tax data platform to consolidate tax information from federal and state authorities.
- Establishment of a new data analysis center to facilitate data sharing and advanced tax risk analysis.
- Use of Artificial Intelligence (AI) and analytics tools to identify suspicious transactions, VAT fraud, and tax evasion patterns.
- Signals Germany's intention to introduce real-time VAT reporting, building on the ongoing B2B e-invoicing rollout (2025-2027).
- Potential foundation for domestic VAT e-reporting, although implementation details, scope, and timelines are yet to be confirmed.
- Follows a broader European trend of combining e-invoicing, digital reporting, and data-driven tax enforcement.
- Extension of accounting record retention requirements to 15 years.
- Requirement for non-EU businesses to maintain taxrelevant data on mirror servers in Germany.
- Introduction of mandatory registered cash systems in cash-intensive sectors.
- Creation of a Joint Centre against Tax and Financial Crime to coordinate investigations between customs and state tax authorities.
- Increased penalties for serious organized tax crimes, including prison sentences of up to 15 years.
- Enhanced cooperation with international enforcement bodies to strengthen cross-border tax investigations.
United Arab Emirates: FTA Issues VAT Guidance on
Digital Currency and Life Insurance
Excerpts from various sources
The UAE Federal Tax Authority (FTA) published Directives No. 3/2026 and No. 4/2026 on 17 July 2026, providing VAT guidance on digital currency transactions and life insurance/reinsurance services.
- Businesses supplying digital currency, or accepting digital currency as payment, must convert transaction values into UAE dirhams (AED) for VAT reporting purposes.
- Taxpayers must select three approved digital currency exchange platforms and use them consistently throughout the calendar year.
- The value of digital currency must be calculated using the average exchange rate from the three selected platforms at the time of supply or receipt of payment.
- The guidance confirms that services connected to life insurance and reinsurance contracts generally form part of the VAT-exempt supply of life insurance, subject to applicable conditions.
Ireland: Permanent 9% VAT Rate Introduced for
Food, Catering and Hairdressing Services
Excerpts from various sources
- Effective 1 July 2026, Ireland made the 9% VAT rate permanent for food and catering services and hairdressing services, replacing the previous temporary measure.
- The reduced rate applies to catering services provided by hotels, while hotel accommodation remains subject to 13.5% VAT.
- The measure, announced under Budget 2026, is intended to support SMEs, which account for the majority of businesses in the affected sectors.
Belgium: Mandatory 5-Corner E-Reporting for domestic B2B transactions
Excerpts from various sources
- On 8 July 2026, Belgium's Federal Cabinet approved a draft law introducing mandatory 5-corner e-reporting for domestic B2B transactions from 1 January 2028. The measure builds on the mandatory Peppol-based B2B e-invoicing regime that became effective on 1 January 2026 for Belgian-established VAT taxpayers.
- Invoice data will be reported to the tax authorities near real-time on a transaction-by-transaction basis, providing greater transparency and improving VAT controls.
- The new e-reporting system will replace the annual VAT customer listing, reducing periodic reporting obligations.
- The framework is based on the Peppol network and the EN 16931 European e-invoicing standard, supporting interoperability and alignment with EU digital VAT initiatives.
- Businesses must retain electronic invoices for 10 years, ensuring data integrity, authenticity and accessibility for audits.
- Non-compliance may result in denial of VAT deduction rights and administrative penalties, with fines of up to EUR 5,000 for repeated failures to comply with e-invoicing requirements.
- To encourage digital adoption, Belgium offers a 20% investment deduction for qualifying digital investments and enhanced tax deductions for certain e-invoicing software costs.
- The reform supports Belgium's alignment with the EU's VAT in the Digital Age (ViDA) initiative and future digital reporting requirements.
Portugal’s expansion of pre-filled VAT returns for domestic taxpayers based on invoice submissions
Excerpts from various sources
- Portugal will expand its pre-filled VAT return program from July 2027 through a redesigned VAT return framework.
- The changes, introduced under Portaria No. 298/2026/1 (16 July 2026), aim to improve the accuracy of tax authority-generated VAT returns by capturing more detailed transaction data.
- Key updates include additional VAT rate breakdowns, new transaction classifications, and reporting fields for specific transactions and VAT adjustments.
- The revised return also supports Portugal's new VAT Group regime, enabling the tax authority to generate pre-filled consolidated VAT returns for VAT groups.
Spain: Proposal to Increase VAT on Short-Term
Tourist Rentals
Excerpts from various sources
- The Spanish government is seeking parliamentary approval to apply the 21% standard VAT rate to shortterm tourist rentals of less than 30 days.
- The proposal would end the current VAT exemption for qualifying short-term rentals and align them more closely with commercial accommodation services.
- The measure would result in a significantly higher VAT burden compared to the 10% reduced VAT rate currently applied to hotels and similar accommodation providers.
- The proposal forms part of a broader housing policy aimed at addressing housing shortages, curbing speculative property use, and responding to concerns over over-tourism.
- Short-term rental platforms and property owners, particularly in major tourist destinations, could face increased compliance obligations and higher operating costs if the proposal is enacted.
Transfer Pricing
Vietnam: New Transfer Pricing Decree Effective from 1 July 20261
Excerpts from various sources
The Government of Vietnam has issued Decree No. 255/2026/ND-CP on tax administration for related-party transactions of enterprises with related-party relationships (Decree 255). The Decree took effect on 1 July 2026 and applies from the 2026 corporate income tax year. It replaces Decree 132/2020/ND-CP and Decree 20/2025/ ND-CP.
While Decree 255 largely retains Vietnam's existing transfer pricing framework, it introduces several notable changes.
Key Changes
Documentation exemption threshold expanded and CbC reporting threshold revision:
The table below summarises the changes in the threshold:
The table below summarizes the treatment of SBC costs:
| Item | Previous (Decree 132/20) | New (Decree 255) |
| Documentation exemption revenue threshold | VND 200 billion | VND 500 billion |
| CbCR threshold | VND 18 trillion | EUR 750 million* |
| Simple-function requirement for exemption | Required | Removed |
Global consolidated revenue and converted using the State Bank of Vietnam's central rate or average cross-exchange rate for December of the prior fiscal year
Related-party definition consolidated
In addition to the existing definition of a related party, the latest decree introduces the following changes:
Has carried forward the financing transaction related-party rules (lending or guarantee in any form) introduced by Decree 20, including exclusions for certain arrangements involving credit institutions, and adds a new exclusion for certain wholly state-owned debt trading and debt resolution entities.
Clarification provided for definitions of Ultimate Parent Entity (UPE) and Tax Treaty to align with Global Minimum Tax (GMT) and OECD concepts.
Benchmarking data source hierarchy
Decree 255 has introduced the following data source hierarchy for transfer pricing (TP) benchmarking:
- Public and official sources first (including newly introduced national databases),
- Commercial databases,
- Tax administration and management databases
The decree retains the existing comparables hierarchy (internal, then domestic, then regional).
Industry profit indicators
For the first time, the Decree 255 gives tax authorities power to publish industry profit indicators by sector, geography, or taxpayer group to support compliance and arm's-length determinations.
Requirement for CbC Report notification for foreign-based MNCs
Taxpayers whose CbC Report is filed by an Ultimate/ Surrogate Parent Entity outside Vietnam must notify via new form 01/TB-BCLN, generally once (updated within 90 days of changes); also applies where a Vietnamese entity is the Surrogate Parent Entity.
Tax administration changes
Emphasis on risk-based administration, pre-audit consultation, inter-agency data sharing, voluntary compliance support, and structured use of tax authority data.
Our Comments
Decree 255 signals continuity in Vietnam's core transfer pricing principles while meaningfully raising the compliance-exemption bar and modernizing CbC reporting to align with the EUR 750 million global standard. The introduction of industry profit indicators and a formal data source hierarchy points toward a more data-driven, risk-based audit environment. MNE groups operating in Vietnam should reassess documentation exemption eligibility, confirm CbCR notification and filing obligations under the new thresholds, and refresh benchmarking and documentation for higher-risk transactions (services, royalties, financing, intangibles) ahead of tax year 2026 compliance.
Singapore: IRAS Clarifies the Scope of Related Parties for RPT Reporting
The Inland Revenue Authority of Singapore (IRAS) has updated its guidance and FAQs relating to the Reporting of Related Party Transactions (RPT Form), providing clarification on the scope of persons and entities that may be regarded as related parties for RPT reporting purposes.
Key Clarifications
- Broader scope of related parties- Individuals may be regarded as related parties if they exercise control or influence under Singapore tax legislation.1
- Implications for financing arrangements- Loans, advances, and other balances involving controlling individuals may warrant closer review.
- Exclusions- Director fees and KMP compensation remain excluded when determining the RPT reporting threshold.2
Why These Changes Matter
Enhanced governance over related-party identification, greater focus on shareholder/director transactions, and improved transfer pricing risk assessment. The update reinforces that related-party analysis should extend beyond traditional group-company relationships and may include shareholders, directors and other controlling individuals where statutory control criteria are satisfied.3
Our Comments
Taxpayers should revisit related-party identification procedures and review arrangements involving controlling individuals to ensure RPT reporting compliance.