Country and European Union News July 2026

29 July 2026

Gibraltar to introduces a new ”Transaction Tax”

As reported during 2025 and confirmed in Gibraltar’s 2026 Budget, Gibraltar has introduced a new “Transaction Tax” on goods as part of the post-Brexit UK–EU treaty arrangements for Gibraltar.

The measure replaces Gibraltar’s previous import duty regime and will be collected from 15 July 2026 on goods imported into Gibraltar or manufactured locally when they are placed on the Gibraltar market for sale. The new tax has been introduced at 15% for the first year, increasing to 16% in the second year, and 17% from the third year.

Following Brexit, Gibraltar remained outside the EU Customs Union, which led to customs checks being implemented when goods and people crossed the land border between Gibraltar and Spain. The Transaction Tax is intended to align Gibraltar’s taxation of goods more closely with EU indirect tax principles and support the continued frictionless movement of goods across the Gibraltar–Spain border.

UPDATE: Sri Lanka introduces non‑resident VAT on B2C e‑services from 1 July 2026

From 1 July 2026, VAT became applicable to digital services supplied by non-resident persons through electronic platforms to customers in Sri Lanka. The measure brings non-resident digital service providers within the Sri Lankan VAT net when their supplies are made to non-VAT-registered customers in Sri Lanka. 

Non-resident suppliers are required to register for VAT if the value of their supplies exceeds LKR 60 million (approximately £134,000) in any consecutive 12-month period, or LKR 15 million (approximately £33,500) in any quarter beginning on or after 1 July 2026. Once registered, they must charge and remit Sri Lankan VAT, currently at 18%, on applicable supplies.

The scope covers a broad range of digitally delivered services, such as cloud-based services, streaming, online advertising, mobile applications, e-books, e-journals, and other internet-based services.