It’s the start of a new month, and TBA Global is here to bring you the latest developments.  Let’s find out more!

US launches tariff war against major trading partners

In the runup to his re-election, President Donald Trump announced his intention to implement tariffs against major trading partners. 

Several tariffs have now been implemented, with drastic consequences for consumer prices.  Here is a summary of the key events:

On 1 February 2025, Trump signed executive orders which imposed a 25% tariff on all goods imported from Canada and Mexico, both major US trading partners.  A further 10% tariff was announced for all goods imported from China. 

Due to go into effect on 4 February, the majority of these tariffs were postponed for 30 days pending further negotiations. The 10% tariff on all Chinese goods entered into effect, and China retaliated with several countermeasures.  

On 10 February, Trump proceeded to remove previous exemptions on steel imports, meaning all steel imports are now subject to a minimum tariff of 25%.  Aluminium tariffs were also raised from 10% to 25% on the same day. 

On 4 March, the previously announced 25% tariff on most Canadian and Mexican goods entered into effect, and the tariff on Chinese goods was increased to 20%. Some exemptions were made for Canadian energy exports (including electricity, natural gas and oil) – these were made subject to a reduced 10% tariff.  These tariffs were postponed again on 6 March, with the new effective date set to be on 2 April. 

On 12 March, Trump implemented tariffs on all steel and aluminium imports at a rate of 25%. 

Several countries including Canada, Mexico, China and the European Union trading bloc have announced retaliatory measures, which have already been implemented or are due to enter into effect imminently. 

The escalating tariff war is likely to have a severe impact on businesses and consumers across the world.  Countries that are nominally unaffected by the tariff announcements may still face an impact – many businesses rely on global supply chains to function.  Businesses who rely on imports in order to produce or sell their goods will face increased costs, which are likely to be passed onto consumers. 

HMRC publishes final evaluation on MTD

On 27 February 2025, HMRC published its final evaluation on its Making Tax Digital (MTD) initiative.  

MTD was introduced with the intention of modernising the UK’s tax system through digitalisation, allowing individuals and businesses to maintain digital records of their taxes, either directly to HMRC or through compatible third-party software.  By reducing the need for manual input, the risk for error would be lowered significantly.  

When HMRC initially launched the MTD initiative, it outlined 3 key aims:

• Reducing the ‘tax gap’ caused by reporting errors
• Making it easier for businesses to report the correct amount of tax
• Creating wider economic benefits and productivity gains through digitalisation

HMRC’s final evaluation suggests that the MTD initiative has indeed led to many of its initial aims being achieved:

• Additional VAT revenue has been generated, in line with original forecasts prior to the launch of MTD
• Most businesses have found the MTD implementation process straightforward, with a relatively simple initial sign-up process
• Most businesses reported greater confidence that their tax was being declared correctly
• Many businesses reported efficiency gains as a result of being able to use software to handle their tax declarations

However, the evaluation nevertheless identified some transitional issues, such as the cost and learning curve associated with implementing new software and practices into existing business operating procedures. 

EU ViDA proposals set for implementation

In November 2024, the European Union Economic and Financial Affairs Council (ECOFIN) approved all three ‘pillars’ of the VAT in the Digital Age (ViDA) proposals.  This marked the end of a lengthy negotiation process, which included several vetoes, such as one applied by Estonia during a negotiating round in 2024.  

The three ‘pillars’ of ViDA are:

• Digital Reporting Requirements (DRR)
• Platform Economy regulations
• A single VAT registration scheme (expansion of One-Stop-Shop)

On 11 March 2025, the European Union announced that it had agreed to formally adopt the agreement concluded by ECOFIN. 

This means that upon entry into force, Member States will be able to begin implementing the three pillars, starting from mandatory e-invoicing requirements (under the DRR pillar).  

As outlined by the European Union:

Effective 1 January 2027, minor legislative clarifications will impact users of the One-Stop Shop (OSS) and IOSS schemes. From July 1, 2028, platforms in short-term accommodation rental and passenger transport must comply with new deemed supplier measures, while the Single VAT Registration reforms and mandatory reverse charge for non-identified suppliers will start.

Digital Reporting Requirements will affect cross-border B2B transactions from 1 July 2030. By 1 January 2035, Member States with a domestic digital real-time transaction reporting obligation must align their systems with the EU standards, marking the final phase of this comprehensive ViDA package.

EU Member States start aligning with new NACE standard

For 2025, the EU has implemented updates to the NACE industry standard classification system – known as the statistical classification of economic activities (Nomenclature statistique des activités économiques dans la Communauté européenne). 

The NACE industry standard classification system is used to classify different types of businesses under standardised categories, based on the goods and services that they trade in.  

The latest version of NACE is NACE Revision 2 Update 1 which is effective from 2025 onwards. 

EU Member States such as Sweden have begun introducing changes to their domestic business classification system to align domestic regulations with the EU-wide changes. 

Businesses affected by changes to their classification may need to submit an update to the relevant business registration authority in their jurisdiction.