Countries bring forward VAT and indirect tax cuts to offset Iran-conflict inflation
Following the start of the current Iran conflict, countries have started reaching for VAT and other indirect tax cuts to help blunt the effects of rising oil prices. This mirrors similar 2022/23 Ukraine VAT measures.
Measures announced since 28th February start of Gulf conflict
- Spain cuts fuel VAT from 21% to 10% until 30 June 2026
- Slovenia proposes temporary food and energy VAT cuts
- Cyprus cuts VAT on electricity and food
- Zambia sets fuel VAT to zero for three months
- Croatia plans for dynamic energy VAT cuts
- Italy VAT windfall triggers cuts debate
- Iceland cuts fuel VAT to 11%
- Kenya cuts fuel VAT to 8%
- Poland cuts fuel VAT to 8%
- Poland debates food VAT cut to 0%
- North Macedonia halves VAT on fuel
- Northern Cyprus cuts fuel VAT to 0%
- Vietnam cuts fuel VAT to 0%
- Philippines brings forward gas VAT exemption
- Spain proposals to reintroduce ‘inflation shield’ on food
- Argentina cuts food on certain agricultural supplies
- Cambodia cuts energy VAT to 4%
2026 cost-of-living VAT measures already announced or debated
- Sweden halves food VAT until 2027
- Austria VAT cut on food July 2026
- Denmark drawing food VAT rate cuts
- Croatia prolongs energy VAT cut into 2027
- Japan debates 2-year suspension of 8% Consumption Tax on food
In similar inflationary burst in the past, bodies like the IMF have criticised VAT cuts as blunt tools to deliver cost-of-living relief for the most needy.
