2025 VAT Rate Increases: Slovakia, Israel, Estonia & More

As the end of 2024 approaches and countries worldwide adopt Budget Plans for 2025, governments are considering many amendments to national VAT rules and regulations in that process. However, several national governments have already adopted and announced some VAT changes.

While countries like Guinea-Bissau are implementing a VAT system to replace the existing taxes, others are making less elaborate changes, such as changing their VAT rates. However, these changes are not insignificant and impact all taxable persons operating in those countries.

Changes to Standard VAT Rates

In October, the Slovakian government announced the decision to change VAT rates, which includes increasing the standard VAT rate by 3% from January 1, 2025. Therefore, the new 23% standard VAT rate will replace the current 20%.

Israel is another European country that announced the increase in the standard VAT rate, which will become effective from the beginning of 2025. An 18% standard VAT rate will replace the currently effective VAT rate of 17%.

2024 marks a significant year for Estonia as VAT rates have been amended. The Estonian government increased the standard VAT rate to 22% from the previous 20%. However, a further increase of 2% was announced for the summer of 2025. Therefore, from mid-2025, the standard VAT rate in Estonia should be 24%.

We move from Europe to Asia, where Indonesia continues its plan to increase VAT rates, which was defined in 2021. The VAT rate was first increased to 11% in 2022 and will be further increased to 12% starting from 2025.

Conclusion

These are just some of the examples of changes in VAT rates around the world. In addition to these changes to standard VAT, many countries, such as Ireland, Germany, Spain, the United Kingdom, Finland, and Poland, will implement changes in the applicable rules of reduced and zero VAT rates.

However, as the Budget Plans are still being discussed nationally, additional changes might be announced in the following months.

Source: VATabout - Slovakia – Government to Implement Notable Changes to VAT Rates, Cabinet Secretariat of The Republic of Indonesia, PwC - Israel, Estonian Ministry of Finance