Washington’s governor signed SB 5814, a bill that will expand the state’s retail sales and use tax to include the sales of digital advertising services starting October 1, 2025. The tax will apply to digital marketing, data processing, custom software support, and online advertising services. It will exclude print and broadcast ads.

The bottom line: Many expect this bill to be challenged and determined as discriminatory against internet-based services according to the Internet Tax and Freedom Act (ITFA).

The Albanian tax authorities issued an official notice to multinational companies providing digital services to final consumers in the country. Albania now requires foreign companies selling digital services to Albanian consumers to appoint a local tax representative, register for VAT, and charge 20% tax on sales. 

The bottom line: This change applies to providers of telecommunications, software, digital content, online education, and other electronic services sold to individuals or non-VAT registered businesses in Albania. Companies that fail to comply within a reasonable timeframe will face legal action from the Albanian Tax Administration.

Washington state lawmakers have passed a bill requiring ad agencies to collect sales tax on digital advertising services. If approved, the bill (SB 5814) would force agencies in Washington to collect 7.5% to 10.6% sales tax when providing services like creating digital ads, analyzing performance, or planning online campaigns. 

The bottom line: Most states don’t tax digital advertising services yet. In recent years, as digital ad revenue has grown, states have explored specialized digital ad taxes based on gross receipts rather than traditional sales taxes. Washington’s bill could become influential, as the state’s tax policies (which often reflect input from major tech companies) have previously set precedents for other states expanding into digital taxation.

South Africa canceled its planned VAT increase following political opposition. The proposed 1% increase over two years, aimed at raising government revenue, faced resistance as the country struggles with slow economic growth and rising living costs. 

The bottom line: South Africa’s VAT rate will remain at 15%. The country’s finance ministry stated that no immediate alternative revenue sources will replace the canceled VAT increase.

Finland has proposed a 0.5% VAT rate reduction in the country’s mid-year budget discussions. The VAT rate would drop from 14% to 13.5%, and this change would go into effect on January 1, 2026. 

The bottom line: Finland recently made additional updates to the country’s VAT rate. In September 2024, the country increased its standard VAT rate to 25.5%. Finland’s finance minister implemented this tax increase to comply with the Euro currency membership requirement that government deficits cannot exceed 3%.

Sri Lanka has introduced official VAT rules for non-residents, effective October 1, 2025. VAT will be applied to services supplied by non-resident businesses through electronic platforms to persons in Sri Lanka. 

The bottom line: The country’s commissioner-general will release details on registration, payment, and compliance procedures soon, but income from the following services are likely to be liable to VAT collections: streaming music and video, apps, images, online gaming, automated e-learning, search engines, online advertising, SaaS or cloud-based software, and ride and home sharing apps.