Net Value Added Tax (VAT) began showing signs of recovery starting in January 2026. Prior to this, up until the end of 2025, indicators remained moderate. This occurred after the government rationalized VAT rates in September.
As part of this September reorganization, the structure was simplified to two main levels: 5 percent and 18 percent, while a special rate of 40 percent was maintained for certain goods. Furthermore, during the rate review, the compensation fee was abolished for most goods, but it remained applicable to tobacco products until the full repayment of outstanding loans and interest obligations on the compensation fee.
These remaining obligations were recognized as settled on February 1. Vivek Jalan, a partner at Tax Connect Advisory Services, noted that the stability of revenues indicates the impact of VAT 2.0, despite the reduction in the number of rates and the simplification of the structure.
Jalan emphasized: 'Even after a sharp reduction in rates and simplification of the VAT structure, net revenues remained stable.'