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{{short description|Form of consumption tax}}
{{redirect|VAT|the identifier for value-added tax|VAT identification number|other uses|Vat (disambiguation){{!}}Vat}}
{{Use dmy dates|date=September 2021}}
[[File: Countries with VAT.svg|260px|thumb|A map of countries and territories by their VAT status, 2019 {{legend|#0000f6|No VAT}} {{legend|#f08481|VAT}}]]
{{Taxation}}
A '''value-added tax''' ('''VAT'''
{{Toclimit}}
==History==
Germany and France were the first countries to implement a VAT,
==Implementation==
VAT can be accounts-based or invoice-based.<ref>{{cite book |url=https://books.google.com/books?id=qnI5E3m09d0C&pg=PA49 |title=The Modern VAT |publisher=[[International Monetary Fund]] |date=5 November 2001 |access-date=30 April 2012 |last1=Bodin |first1=Jean-Paul |first2=Liam P. |last2=Ebril |first3=Michael |last3=Keen |first4=Victoria P. |last4=Summers |isbn=978-1-58906-026-5}}</ref> All countries except Japan use the invoice method.<ref name="CRS 2008" /><ref name="Cruz Flat Tax" /><ref name="USCC VAT white paper" />
Using invoices, each seller pays VAT on their sales and passes the buyer an invoice that indicates the amount of tax paid excluding deductions (input tax). Buyers who themselves add value and resell the product pay VAT on their own sales (output tax). The difference between output tax and input tax is the amount paid to the government (or refunded, in the case of a negative amount).
Using accounts, the tax is calculated as a percentage of the difference between sales and purchases from taxed accounts.<ref name="CRS 2008" /><ref name="Cruz Flat Tax" /><ref name="USCC VAT white paper" />
==Incentives==
The main benefit of VAT is that in relation to many other forms of taxation, "it does not distort firms' production decisions, it is difficult to evade, and it generates a substantial amount of revenue."<ref>{{Cite journal |last1=Brockmeyer |first1=Anne |last2=Mascagni |first2=Giulia |last3=Nair |first3=Vedanth |last4=Waseem |first4=Mazhar |last5=Almunia |first5=Miguel |date=2024 |title=Does the Value-Added Tax Add Value? Lessons Using Administrative Data from a Diverse Set of Countries |journal=Journal of Economic Perspectives |language=en |volume=38 |issue=1 |pages=107–132 |doi=10.1257/jep.38.1.107 |issn=0895-3309|doi-access=free }}</ref>
=== VAT refunds ===
{{Unreferenced section|date=May 2024}}
Many countries offer VAT refunds to international travelers on purchased goods that they take out of the country. While VAT refunds are commonly utilized by tourists, the process for business travelers to reclaim VAT can be more complex. As a result, eligible refunds for business travelers are often left unclaimed.
Some countries, particularly in Western Europe, offer VAT refunds on business-related expenses to encourage the hosting of business meetings, events, and conferences within their borders. These refunds often extend to costs incurred during trade fairs and exhibitions. In certain countries, VAT paid on meals and fuel may also be eligible for a refund.
=== Imports ===
For VAT purposes, an importer is assumed to have contributed 100% of the value of a product imported from outside of the taxing jurisdiction. The importer thus pays VAT on the entire sales price of the import, and has no invoices to use to reduce the amount, even if the foreign manufacturer paid taxes. This is in contrast to the US income tax system, which allows businesses to expense costs paid to foreign manufacturers. For this reason, VAT is often considered by US manufacturers to be a [[trade barrier]], as further discussed below.
==Registration==
{{Unreferenced section|date=May 2024}}
In general, countries that have a VAT system require most businesses to register for VAT purposes. VAT-registered businesses can be natural persons or legal entities. Regulations specifying which businesses must register vary by country. VAT-registered businesses are required to add VAT to their sales.
==Comparison with income tax==
* VAT is paid by businesses, while income tax is paid both by businesses and individuals.
*
==Comparison with sales tax==
VAT has no effect on how businesses organize, because the same amount of tax is collected regardless of how many times goods change hands before arriving at the ultimate consumer. By contrast, sales taxes are collected on each transaction, encouraging businesses to [[Vertical integration|vertically integrate]] to reduce the number of transactions and thereby reduce the amount of tax. For this reason, VAT has been gaining favor over traditional sales taxes.
Another difference is that VAT is collected at the national level, while in countries such as India and the US, sales tax is collected at the point of sale by the local jurisdiction, leading them to prefer the latter method.
The main disadvantage of VAT is the extra accounting required by those in the supply chain. When the VAT system has few, if any, exemptions such as with GST in New Zealand, payment of VAT is even simpler.<ref>{{Cite web |last=kristenbickerstaff |date=2020-12-21 |title=What is the difference between sales tax and VAT? |url=https://tax.thomsonreuters.com/blog/what-is-the-difference-between-sales-tax-and-vat/ |access-date=2023-07-20 |website=Tax & Accounting Blog Posts by Thomson Reuters |language=en-US}}</ref>
A general economic idea is that if tax rates are high enough, people scheme to evade them. However, VAT rates have risen above 10% without widespread evasion because of the collection mechanism. However VAT is subject to frauds like [[missing trader fraud]], which can significantly reduce tax payments.
==Examples==
===Untaxed===
[[File:VAT1b2.png|right|Without any tax]]
* A widget manufacturer, for example, spends
* The widget is sold wholesale to a widget retailer for $1.20,
* The widget retailer then sells the widget to a widget consumer for $1.50,
===
[[File:VAT2b22.png|right|With a 10% sales tax]]
* The manufacturer spends $1.00 for the raw materials, certifying it is not a final consumer.
* The manufacturer charges the retailer $1.20, checking that the retailer is not a consumer, leaving the same gross margin of $0.20.
* The retailer charges the consumer ($1.50 × 1.10) = $1.65 and pays the government
So the consumer
The manufacturer is
===
10% VAT:
[[File:VAT3b22.png|right|With a 10% VAT]]
* The manufacturer spends ($1 × 1.10) = $1.10
* The manufacturer charges the retailer ($1.20 × 1.10) = $1.32 and pays the government ($0.12 ''minus'' $0.10) =
* The retailer charges the consumer ($1.50 × 1.10) = $1.65 and pays the government ($0.15 ''minus'' $0.12) =
*
* Note that the taxes paid by both the manufacturer and the retailer to the government are 10% of the ''values added'' by their respective business practices (e.g. the ''value added'' by the manufacturer is $1.20 minus $1.00, thus the tax payable by the manufacturer is ($1.20 – $1.00) × 10% =
In the VAT example above, the consumer has paid, and the government received, the same dollar amount as with a sales tax. At each stage of
Each business is responsible for handling the necessary tax paperwork
===Limitations
== Limitations of VAT ==
[[File:TaxWithTax.svg|right|thumb|A supply-demand analysis of a taxed market]]
{{Unreferenced section|date=May 2024}}
VAT, like most taxes, distorts economic behavior. Because the price rises, the quantity of goods traded typically decreases.{{citation needed|date=May 2024}} This reduces [[consumer welfare]], worker and business incomes, and corresponding income tax revenues. This is known as a [[deadweight loss]], because the VAT produces no revenue from transactions that do not take place. If these losses are greater than the VAT on transactions that do take place, the tax is inefficient.
In the diagram
* Deadweight loss: the area of the triangle formed by the right side of the tax income box, the original supply curve, and the demand curve
* Government's tax income: the grey rectangle captioned “Tax Revenue”
* Total [[consumer surplus]] after the shift: the green area
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==Imports and exports==
{{Unreferenced section|date=May 2024}}
As a consumption tax, VAT usually replaces sales tax. Ultimately, it taxes the same people and businesses the same amounts of money, despite its different internal mechanism. VAT and [[sales tax]] significantly differ for imports and exports:
* VAT is charged for exports while sales tax is not.
* Sales tax is paid for the full price of imports, while VAT is charged only for value added by the importer and the reseller.
Without an adjustment, exports would be taxed twice if exported from a VAT country to a sales tax country. Conversely, imports from a sales tax country into a VAT country pay no sales tax and VAT on only a fraction of the value. Countries differ in taxation for imports/exports. Sales tax is charged in the same way for both imported and domestic goods, and is never charged twice.
To address this problem, nearly all VAT countries adjust their rules for imported and exported goods:
* All imports are charged VAT for their full price when they are sold for the first time.
* All exports are exempted from any VAT payments.
For these reasons VAT on imports and VAT rebates on exports form a common practice approved by the [[World Trade Organization]] (WTO).{{Citation needed|date=October 2018}}
===Example===
Note: The European VAT system affects company cashflow due to compliance costs<ref name="PWC">{{cite web | url=https://www.pwc.com/gx/en/tax/pdf/impact-of-vat.pdf | title=The impact of VAT compliance on business | publisher=PriceWaterhouseCoopers | date =September 2010}}</ref> and fraud risk for governments due to overclaimed taxes.{{citation needed|date=October 2019}}
B2B sales between countries have different rules, such that the reverse charge (VAT) or sales tax exemption are applied; in the case of B2C sales the seller pays the VAT or sales tax to the receiving jurisdiction (creating the controversial situation of a foreign company paying taxes of their taxable residents/citizens without jurisdiction on seller).
== Criticisms ==
[[File:Campaña nomasiva.com 049.jpg|thumb|4 May 2010 "Campaña no más IVA" in Spain]]
VAT has been criticized as its burden falls on consumers. It is a [[regressive tax]], meaning that the poor pay more, as a percentage of their income, than the rich, given their higher [[marginal propensity to consume]].<ref name="auto">{{cite web |date=13 December 2018 |title=Options for Reducing the Deficit: 2019 to 2028 |url=https://www.cbo.gov/budget-options/2018/54820 |access-date=1 March 2020 |publisher=Congressional Budget Office}}</ref> Defenders reply that relating taxation levels to income is an arbitrary standard and that the VAT is in fact a [[proportional tax]]. An [[OECD]] study found that VAT could be slightly progressive.<ref name="oecd">{{cite report |url=https://www.oecd-ilibrary.org/deliver/4a494083-en.pdf?itemId=%2Fcontent%2Fpaper%2F4a494083-en&mimeType=pdf |title=OECD Taxation Working Papers: Reassessing the regressivity of the VAT |publisher=Organisation for Economic Co-Operation and Development (OECD) |doi=10.1787/22235558 |issn=2223-5558 |doi-access=free |series=OECD Taxation Working Papers |year=2022}}</ref><ref>{{Cite web |last=Enache |first=Cristina |date=13 August 2020 |title=Contrary to Popular Belief, Value-Added Taxes Found to Be Slightly Progressive |url=https://taxfoundation.org/value-added-tax-vat-progressive/ |work=Tax Foundation}}</ref> VAT's effective regressivity can be reduced by applying a lower rate to products that are more likely to be consumed by the poor.<ref name="auto" /> Some countries compensate by implementing a progressive income tax or by transfer payments targeted to the poor.<ref>Chia-Tern Huey Min (October 2004) [https://web.archive.org/web/20071129192831/http://adb.org/Documents/Events/2004/Fourteenth-Tax-Conference/text-chia.pdf GST in Singapore: Policy Rationale, Implementation Strategy & Technical Design], Singapore Ministry of Finance.</ref>
VAT revenues are frequently lower than expected because they are difficult and costly to administer and collect.{{Citation needed|date=November 2017}} However, collection of other taxes may face similar or worse challenges. VAT has become more important in many jurisdictions as [[tariff]] levels have fallen worldwide due to trade liberalization, as VAT has effectively replaced reduced tariff revenues. Whether the costs and distortions of VATs are lower than the economic inefficiencies and enforcement issues (e.g. smuggling) from high import tariffs is debated, but theory suggests VATs are far more efficient.{{citation needed|date=September 2017}}
Certain industries (small-scale services, for example) tend to have more VAT [[Tax avoidance|avoidance]], particularly where cash transactions predominate, and VAT may be criticized for encouraging this.{{Citation needed|date=November 2017}} From the perspective of government, however, VAT may be acceptable because it captures at least some transactions. Another criticism is that consumer costs increase.
===Deadweight loss===
The incidence of VAT may not fall entirely on consumers as traders tend to absorb VAT so as to maintain sales volumes. Conversely, not all cuts in VAT are passed on in lower prices. VAT consequently leads to a deadweight loss if cutting prices pushes a business below the margin of profitability. The effect can be seen when VAT is cut or abolished. Sweden reduced VAT on restaurant meals from 25% to 12.5%, creating 11,000 additional jobs.<ref>{{Cite web |title=Rätt lagat? Effekter av sänkt moms på restaurang- och cateringtjänster i Sverige |url=https://www.nationalekonomi.se/sites/default/files/2016/09/44-5-bfjmst.pdf |access-date=5 October 2023 |website=www.nationalekonomi.se}}</ref>
===Fraud ===
VAT offers distinctive opportunities for evasion and fraud, especially through abuse of the credit and refund mechanism.<ref>{{cite web |last1=Crawford |first1=Ian |last2=Keen |first2=Michael |last3=Smith |first3=Stephen |title=Value Added Tax and Excises |url=https://ifs.org.uk/mirrleesreview/dimensions/ch4.pdf |website=[[Institute for Fiscal Studies]]}}</ref> VAT overclaim fraud reached as high as 34% in Romania.<ref>{{cite web |title=VAT Gap |url=https://ec.europa.eu/taxation_customs/vat-gap_en}}</ref>
Exports are generally [[Zero-rated supply|zero-rated]], creating opportunity for fraud. In Europe, the main source of problems is [[carousel fraud]].{{Citation needed|date=December 2007}} This fraud originated in the 1970s in the [[Benelux]] countries. VAT fraud then became a major problem in the [[UK]].<ref>O'Grady, Sean (26 July 2007) "[https://web.archive.org/web/20081224045212/http://www.independent.co.uk/news/business/news/carousel-fraud-has-cost-uk-up-to-16316bn-458771.html Carousel fraud 'has cost UK up to £16bn']", ''The Independent''.</ref> Similar fraud possibilities exist inside a country. To avoid this, countries such as Sweden hold the major owner of a limited company personally responsible.<ref name="economyincrisis.org">{{Cite web |title=Now is the Time to Reform the Income Tax with a VAT! | Economy in Crisis |url=http://economyincrisis.org/content/now-is-the-time-to-reform-the-income-tax-with-a-vat |url-status=dead |archive-url=https://web.archive.org/web/20160323111240/http://economyincrisis.org/content/now-is-the-time-to-reform-the-income-tax-with-a-vat |archive-date=23 March 2016 |access-date=17 March 2016}}</ref>
===Churning===
Because VAT is included in the price index to which state benefits such as pensions and welfare payments are linked in some countries, as well as public sector pay, some of the apparent revenue is churned – i.e. taxpayers are given the money to pay the tax, reducing net revenue.<ref>{{cite web |title=The dead loss of VAT | Taxation | Current affairs | Comment |url=https://www.landvaluetax.org/taxation/the-dead-loss-of-vat}}</ref>
===Business cashflow ===
Refund delays by the tax administration can damage businesses.<ref name="PWC" />
===Compliance costs===
Compliance costs are seen as a burden on business.<ref>{{Cite web |title=The impact of VAT compliance on business |url=https://www.pwc.com/gx/en/tax/pdf/impact-of-vat.pdf |access-date=2022-05-30 |website=PricewaterhouseCoopers}}</ref> In the UK, compliance costs for VAT have been estimated to be about 4% of the yield, with greater impacts on smaller businesses.<ref>{{Cite web |last=Abolins |first=Jon |date=1 May 2002 |title=VAT Software: compliance costs |url=https://www.accountancydaily.co/vat-software-compliance-costs |website=Accountancy Daily}}</ref>
===Trade criticism===
[[File:Counties_with_VAT_tax.jpeg|upright=1.8|thumb|right|National VAT act as a tariff on imports and their exports are exempt from VAT ([[Zero-rated supply|zero-rated]]).<ref name="economyincrisis.org" />]]
Under a sales tax system, only businesses selling to the end-user are required to collect tax and bear the accounting cost of collecting the tax. Under VAT, manufacturers and wholesale companies also incur accounting expenses to handle the additional paperwork required for collecting VAT, increasing overhead costs and prices.
The American Manufacturing Trade Action Coalition in the United States consider VAT charges on US products and rebates for products from other countries to be an [[unfair trade practice]]. AMTAC claims that so-called "border tax disadvantage" is the greatest contributing factor to the US [[current account deficit]], and estimated this disadvantage to US producers and service providers to be $518 billion in 2008 alone. US politicians such as congressman [[Bill Pascrell]], advocate either changing WTO rules relating to VAT or rebating VAT charged on US exporters.<ref>{{cite web |title=Border Adjusted Taxation / Value Added Tax (VAT) |url=http://www.amtacdc.org/Pages/Policy-Issues.aspx#VAT |access-date=30 April 2012 |publisher=Amtacdc.org}}</ref> A business tax rebate for exports was proposed in the 2016 [[Republican Party (United States)|GOP]] tax reform policy paper.<ref name="Marc A. Thiessen">{{cite news |last=Thiessen |first=Marc A. |date=17 January 2017 |title=Yes, Trump can make Mexico pay for the border wall. Here's how. |url=https://www.washingtonpost.com/opinions/yes-trump-can-make-mexico-pay-for-the-border-wall-heres-how/2017/01/17/7edf7872-dcbf-11e6-ad42-f3375f271c9c_story.html |access-date=17 January 2017 |newspaper=The Washington Post}}</ref><ref name="GOP Tax Reform 2016" /> The assertion that this "border adjustment" would be compatible with the rules of the WTO is controversial; it was alleged that the proposed tax would favour domestically produced goods as they would be taxed less than imports, to a degree varying across sectors. For example, the wage component of the cost of domestically produced goods would not be taxed.<ref>{{cite news |last1=Freund |first1=Caroline |author-link1=Caroline Freund |date=18 January 2017 |title=Trump Is Right: 'Border Adjustment' Tax Is Complicated |url=https://www.bloomberg.com/view/articles/2017-01-18/trump-is-right-border-adjustment-tax-is-complicated |access-date=19 January 2017 |work=BloombergView |publisher=Bloomberg LP}}</ref>
A 2021 study reported that value- added taxes were unlikely to distort trade flows.<ref>{{Cite journal |last1=Benzarti |first1=Youssef |last2=Tazhitdinova |first2=Alisa |date=2021 |title=Do Value-Added Taxes Affect International Trade Flows? Evidence from 30 Years of Tax Reforms |url=http://www.nber.org/papers/w26195.pdf |journal=American Economic Journal: Economic Policy |language=en |volume=13 |issue=4 |pages=469–489 |doi=10.1257/pol.20190492 |issn=1945-7731 |s2cid=240240194}}</ref>
== Around the world ==
[[File:VAT Rates of Countries.svg|thumb|300px|VAT rate by country
{{legend|#c0c0c0|No VAT}}
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===Armenia===
{{Main|Taxation in Armenia}}
The system is input-output based. Producers are allowed to subtract VAT on their inputs from the VAT they charge on their outputs and report the difference.<ref name="Armenia - Corporate - Other taxes"/> VAT is purchased quarterly. An exception occurs for taxpayers who state monthly payments. VAT is disbursed to the state's budget on the 20th day of the month after the tax period.<ref>[http://www.tacentral.com/economy.asp?story_no=9 The tax system in Armenia: Economy: Armenia travel, history, Archeology & Ecology: Tourarmenia: Travel guide to Armenia. THE TAX SYSTEM IN ARMENIA | Economy | Armenia Travel, History, Archeology & Ecology | TourArmenia | Travel Guide to Armenia. (n.d.). Retrieved December 3, 2022.]</ref> The law took effect on January 1, 2022.<ref>[https://www.vertexinc.com/resources/resource-library/armenia-change-vat-rules-covering-digital-services-supplied-non#:~:text=The%20rules%20in%20Armenia%20come,to%20these%20sales%20is%2020%25. Armenia to change VAT rules covering digital services supplied by non-residents. Vertex, Inc. (2022, March 14). Retrieved December 3, 2022 ]</ref>
===Australia===
{{Main|Goods and services tax (Australia)}}
The goods and services tax (GST) is a
===Bangladesh===
{{Main|Taxation in Bangladesh}}
The [[National Board of Revenue]] (NBR)
===Barbados===
{{Main|Economy of Barbados#Taxation}}
VAT
=== Bulgaria ===
{{Main|Taxation in Bulgaria}}
===Canada===
{{Main|Goods and services tax (Canada)|Harmonized sales tax}}
Goods and Services Tax (GST) is a national sales tax introduced
Advertised and posted prices generally exclude taxes, which are calculated at the time of payment; common exceptions are motor fuels, the posted prices for which include sales and [[excise]] taxes, and items in vending machines as well as alcohol in monopoly stores. Basic groceries, prescription drugs, inward/outbound transportation and medical devices are
=== Chile ===
VAT
===China===
{{Main|Taxation in China}}
VAT was implemented
=== Czech Republic ===
In 1993, a standard rate of 23% and a reduced rate of 5% for non-alcoholic beverages, sewerage, heat, and public transport was introduced. In 2015, rates were revised to 21% for the standard rate, and 15% and 10% reduced rates. The lowest reduced rate primarily targeted baby food, medicines, vaccines, books, and music shops, while maintaining a similar redistribution of goods and services for the other rates.
In 2024, a law aimed at reducing the national debt featured return to two rates: a standard rate of 21% and a reduced rate of 12%. Goods and services were redistributed among different tax rates.
There was only one services that shifted from the standard rate to the reduced rate and that were non-regular land passenger bus services. These are not taxi services, which apply a VAT rate of 21%. Books and printed materials, including electronic books, were zero rated.
Several services were moved from reduced rates to the standard rate. Examples include hairdressers and barbers, bicycle repairs, footwear and clothing repairs, freelance journalists and models, cleaning services, and municipal waste.<ref>{{Cite web |title=Informace GFŘ ke změnám sazeb DPH od 1. 1. 2024 |url=https://www.financnisprava.cz/cs/financni-sprava/media-a-verejnost/tiskove-zpravy-gfr/tiskove-zpravy-2024/informace-gfr-ke-zmenam-sazeb-dph-od-20240101-20444.aspx |access-date=2024-04-16 |website=Finanční správa České republiky |language=cs}}</ref><ref>{{Cite web |date=2015-04-01 |title=Sazby daně z přidané hodnoty a změny DPH {{!}} Aktuálně.cz |url=https://www.aktualne.cz/wiki/finance/dph-dan-z-pridane-hodnoty-sazby-zmeny/r~0d2bd12edbab11e488b0002590604f2e/ |access-date=2024-04-16 |website=Aktuálně.cz - Víte, co se právě děje |language=cs}}</ref><ref>{{Cite web |title=Změny DPH přehledně. Tady je kompletní seznam |url=https://www.penize.cz/dph/442212-zmeny-dph-prehledne-kompletni-seznam |access-date=2024-04-16 |website=Peníze.cz |language=cs}}</ref>
===European Union===
{{Main|European Union value added tax}}
The [[European Union value added tax|European Union
Each
VAT
===Gulf Cooperation Council===
{{Main|Gulf Cooperation Council}}
The [[United Arab Emirates]] (UAE) on 1 January 2018 implemented VAT. For companies whose annual revenues exceed $102,000 (Dhs 375,000), registration is mandatory. GCC countries agreed to an introductory rate of 5%.<ref>{{cite journal|author=Thacker, Sunil |ssrn=1435988 |title=Taxation in the Gulf: Introduction of a Value Added Tax|journal=Michigan State Journal of International Law|volume= 17|issue= 3|page= 721|year= 2008–2009}}</ref><ref>{{cite news |url=http://gulfnews.com/business/economy/uae-outlines-vat-threshold-for-firms-in-phase-1-1.1847025|title=UAE outlines VAT threshold for firms in Phase 1|first=Sarah|last=Diaa|date=15 June 2016|work=Gulf News}}</ref><ref>{{cite web|url=https://ncalc.ru/en/news/uae-to-implement-vat-on-1-january-2018.pdf|title=UAE to implement VAT on 1 January 2018|last=PricewaterhouseCoopers}}</ref> [[Saudi Arabia]]'s VAT system uses a 15% rate.<ref>{{Cite news|url=https://www.bbc.com/news/business-52612785|title=Saudi Arabia triples VAT to support coronavirus-hit economy|work=BBC News|date=11 May 2020}}</ref>
===India===
{{Further|Value-added taxation in India}}
VAT was introduced
===Indonesia===
{{
===Italy===
{{
===Israel===
{{
===Japan===
{{Further|Taxation in Japan}}
VAT was implemented in Japan in 1989.<ref name=":4">{{Cite journal |last=Takahashi |first=Ryotaro |date=2024 |title=Tale of a Missed Opportunity: Japan's Delay in Implementing a Value-Added Tax |url=https://www.cambridge.org/core/journals/social-science-history/article/tale-of-a-missed-opportunity-japans-delay-in-implementing-a-valueadded-tax/E51BF2A1C41495A456E5DD797B2B7908 |journal=Social Science History |pages=1–25 |language=en |doi=10.1017/ssh.2024.1 |issn=0145-5532|doi-access=free }}</ref> Tax authorities debated VAT in the 1960s and 1970s, but decided against it at the time.<ref name=":4" />
The standard rate is 10%. Food, beverages, newspaper subscriptions with certain criteria and other necessities qualify for a rate of 8%. Transactions including land sales or lease, securities sales and the provision of public services are exempt.<ref>{{Cite web |title=Japan - Corporate - Other taxes |url=https://taxsummaries.pwc.com/japan/corporate/other-taxes |access-date=2024-04-16 |website=taxsummaries.pwc.com |language=en-gb}}</ref>
===Malaysia===
{{
===Mexico===
The existing sales tax ({{lang-es|link=no|impuesto a las ventas}}) was replaced by VAT ({{lang-es|link=no|Impuesto al Valor Agregado}}, IVA) on 1 January 1980. As of 2010, the general VAT rate was 16%. This rate was applied all over Mexico except for border regions (i.e. the United States border, or Belize and Guatemala), where the rate was 11%. Books, food, and medicines are zero-rated. Some services such as medical care are zero-rated. In 2014 the favorable tax rate for border regions was eliminated and the rate increased to 16% across the country.
===Nepal===
{{
===New Zealand===
{{
===
{{redirect|MOMS|other uses|Mom (disambiguation)}}
MOMS ({{lang-da|merværdiafgift}}, formerly {{Lang|da|meromsætningsafgift}}), {{lang-no|merverdiavgift}} ([[bokmål]]) or {{Lang|nn|meirverdiavgift}} ([[nynorsk]]) (abbreviated ''MVA''), {{lang-sv|Mervärdes- och OMSättningsskatt}} (until the early 1970s labeled as OMS {{Lang|sv|OMSättningsskatt}} only), {{lang-is|virðisaukaskattur}} (abbreviated ''VSK''), {{lang-fo|meirvirðisgjald}} (abbreviated ''MVG'') or Finnish: {{Lang|fi|arvonlisävero}} (abbreviated ''ALV'') are the Nordic terms for [[Value Added Tax|VAT]]. Like other countries' sales and VAT, it is an [[indirect tax]].
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|}
In Finland, the standard rate
In Iceland, VAT is 24% for most goods and services. An 11% rate is applied for hotel and guesthouse stays, [[licence fee]]s for radio stations (namely [[RÚV]]), newspapers and magazines, books; hot water, electricity and oil for heating houses, food for human consumption (but not alcoholic beverages), access to [[toll road]]s and music.<ref>{{cite web| url = http://eng.fjarmalaraduneyti.is/media/log-reglur/The_Value_Added_Tax_Act_with_subsequent_amendments.pdf| title = The Value Added Tax Act with subsequent amendments| work = Ministry of Finance and Economic Affairs| date = 9 October 2014}}</ref>
In Norway, the general rate is 25%, 15% on foodstuffs, and 12% on hotels and holiday homes, on some transport services, cinemas.<ref>{{cite web| url = http://www.statsbudsjett.no/Statsbudsjettet-2011/English/?pid=48921#hopp| title = Main features of the Government's tax programme for 2011| work = Ministry of Finance| date = 5 October 2010| access-date = 4 December 2010| archive-date = 26 December 2018| archive-url = https://web.archive.org/web/20181226011144/https://www.statsbudsjettet.no/Statsbudsjettet-2019/#hopp| url-status = dead}}</ref> Financial services, health services, social services and educational services,<ref>{{cite web| url = http://www.lovdata.no/all/hl-20090619-058.html#map015| title = Merverdiavgiftsloven §§ 6–21 to 6–33| language = no| access-date = 28 November 2010| publisher = lovdata.no}}</ref> newspapers, books and periodicals are zero-rated.<ref>{{cite web| url = http://www.lovdata.no/all/hl-20090619-058.html#map012| title = Merverdiavgiftsloven §§ 6-1 to 6–20| language = no| access-date = 28 November 2010| publisher = lovdata.no}}</ref> [[Svalbard]] has no VAT because of a clause in the [[Svalbard Treaty]].
In Sweden, VAT is 25% for most goods and services, 12% for foods including restaurants, and hotels. It is 6% for printed matter, cultural services, and transport of private persons. Zero-rated services including public (but not private) education, health, dental care. Dance event tickets are 25%, concerts and stage shows are 6%, while some types of cultural events are 0%.
MOMS replaced OMS (Danish {{Lang|da|omsætningsafgift}}, Swedish {{Lang|sv|omsättningsskatt}}) in 1967, which was a tax applied exclusively for retailers.
===Philippines===
The
=== Poland ===
VAT was introduced in 1993. The standard rate is 23%. Items and services eligible for an 8% include certain food products, newspapers, goods and services related to agriculture, medicine, sport, and culture. The complete list is in Annex 3 to the VAT Act. A 5% applies to basic food items (such as meat, fruits, vegetables, dairy and bakery products), children's items, hygiene products, and books. Exported goods, international transport services, supply of specific computer hardware to educational institutions, vessels, and air transport are zero rated. Taxi services have flat-rate tax of 4%. Flat-rate farmers supplying agricultural goods to VAT taxable entities are eligible for a 7% refund.<ref>{{Cite web |title=List of VAT rates |url=https://www.podatki.gov.pl/en/value-added-tax/general-vat-rules-and-rates/list-of-vat-rates/ |access-date=2024-04-16 |website=www.podatki.gov.pl |language=en-US}}</ref>
=== Russia ===
{{Further|Taxation in Russia}}
The VAT rate is 20% with exemptions for some services (for example, medical care). VAT payers include organizations (industrial and financial, state and municipal enterprises, institutions, business partnerships, insurance companies and banks), enterprises with foreign investments, individual entrepreneurs, international associations, and foreign entities with operations in the Russian Federation, non-commercial organizations that conduct commercial activities, and those who move goods across the border of the Customs Union.<ref>{{Cite web|url=http://taxsummaries.pwc.com/ID/Russian-Federation-Corporate-Other-taxes|title=Russian Federation - Other taxes impacting corporate entities, Value-added tax (VAT)}}</ref><ref>{{Cite web|url=https://rg.ru/2007/03/12/nalog-kodeks2.html|title=Налоговый кодекс Российской Федерации. Часть вторая от 5 августа 2000 г. N 117-ФЗ|website=Российская Газета|trans-title=Russian Federation Tax Code, Part 2 August 5, 2000 N 117 Federal Law|quote=3. Налогообложение производится по налоговой ставке 18 процентов в случаях, не указанных в пунктах 1, 2 и 4 настоящей статьи.}}</ref><ref>{{Cite book|url=https://www.nalog.ru/html/sites/www.eng.nalog.ru/Tax%20Code%20Part%20Two.pdf|title=TAX CODE OF THE RUSSIAN FEDERATION PART II, Article 164 Tax Rates|publisher=Russian Ministry of Finance|pages=41}}</ref>
===Singapore===
{{Excerpt|Goods and Services Tax (Singapore)}}
=== Slovakia ===
The standard rate is 20%. A 10% rate primarily applies to essential goods such as (healthy) food, medicine, and books. A 5 % rate covers building renovation.<ref>{{Cite web |last=Solíková |first=Veronika |date=2023-12-21 |title=Podávanie alkoholu v rámci reštauračných a stravovacích služieb bude podliehať 20 % sadzbe DPH |url=https://www.podnikajte.sk/dan-z-pridanej-hodnoty/sadzby-dph-2024 |access-date=2024-04-16 |website=Podnikajte.sk |language=sk}}</ref>
===Spain===
{{Excerpt|Taxation in Spain#Value added tax}}
===South Africa===
{{Excerpt|Taxation in South Africa#Value-Added Tax (VAT)}}
===Switzerland and Liechtenstein===
{{Further|Taxation in Switzerland#Value added tax}}{{Excerpt|Taxation in Switzerland#Value added tax}}
===Taiwan===
{{Main|Taxation in Taiwan}}
VAT in Taiwan is 5%. It is levied on all goods and services. Exceptions include exports, vessels, aircraft used in international transportation, and deep-sea fishing boats.<ref>{{Cite web |last=PricewaterhouseCoopers |title=Taiwan Pocket Tax Book |url=https://www.pwc.tw/zh/publications/topic-tax/taiwan-pocket-tax-book.html |access-date=2024-04-16 |website=PwC |language=zh-tw}}</ref>
===Trinidad and Tobago===
VAT is 12.5%.
=== Ukraine ===
{{Excerpt|Taxation in Ukraine#Value added tax}}
===United Kingdom===
{{Further|Value-added tax in the United Kingdom}}
The
===United States===
{{Further|Sales taxes in the United States}}
In the United States no federal VAT is in effect. Instead, [[Sales taxes in the United States|sales and use taxes are used in most states]].<ref>{{cite court |litigants=Trinova Corp. v. Michigan Dept. of Treasury |vol=498 |reporter=U.S. |opinion=358 |pinpoint=362 |court=[[United States Supreme Court]] |date=1991 |url=https://scholar.google.com/scholar_case?case=2384909052279682312&q=credit+%22use+tax%22+VAT |quote=Although in Europe and Latin America VAT's are common,...in the United States they are much studied but little used.}}</ref><ref>{{cite news|last1=Gulino|first1=Denny|title=Puerto Rico May Finally Get Attention of Republican Lawmakers|url=https://mninews.marketnews.com/content/puerto-rico-may-finally-get-attention-republican-lawmakers|access-date=9 February 2016|publisher=MNI|date=18 September 2015|quote=The concept of a value added tax in any form as part of the U.S. tax regime has consistently raised the hackles of Republican policy makers and even some Democrats because of fears it could add to the tax burden rather than just redistribute it to consumption from earnings. For decades one of the most hotly debated tax policy topics, a VAT imposes a sales tax at every stage where value is added.}}</ref>
[[Hawaii]] has a 4% [[Gross receipts tax|General Excise Tax]] (GET) that is charged on gross business income. Individual counties add a .5% surcharge. Unlike a VAT, rebates are not available, such that items incur the tax each time they are (re)sold.<ref>{{Cite web |title=General Excise Tax (GET) Information {{!}} Department of Taxation |url=https://tax.hawaii.gov/geninfo/get/ |access-date=2024-05-11 |language=en-US}}</ref>
====Discussions about a federal VAT====
{{expand section|date=February 2016}}
A [[border-adjustment tax (United States)|border-adjustment tax]] (BAT) was proposed by the [[Republican Party (United States)|Republican Party]] in
===Vietnam===
All organizations and individuals producing and trading VAT taxable goods and services pay VAT, regardless of whether they have Vietnam-resident establishments.
Vietnam has three VAT rates: 0 percent, 5 percent and 10 percent. 10 percent is the standard rate.
A variety of goods and service transactions qualify for VAT exemption.<ref>{{Cite web |title=Vietnam – indirect tax guide |url=https://kpmg.com/xx/en/home/insights/2019/10/vietnam-indirect-tax-guide.html#:~:text=Exempt%3A%20there%20are%2026%20categories%20of%20VAT%20exempt,temporary%20imported%20goods%20for%20re-export%20and%20technology%20transfer. |website=KPMG| date=19 September 2023 }}</ref>
==Tax rates==
Line 490 ⟶ 430:
|-
| {{Flagu|Estonia}}
| {{nts|
| {{nts|9}}%
| Km
Line 766 ⟶ 706:
| {{Flagu|China}}<ref group="lower-alpha" name="fn3">These taxes do not apply in Hong Kong and [[Macau]], which are [[public finance|financially]] independent as [[Special Administrative Region of the People's Republic of China|special administrative regions]].</ref>
| 13%
| 9% for foods, printed matter, and households fuels; 6% for service; or 3% for non-
| 增值税 (zēng zhí shuì)
|-
Line 1,186 ⟶ 1,126:
|-
| {{Flagu|Singapore}}
|
| 0% for public healthcare services, such as at public hospitals and polyclinics, with GST absorbed by the government.
| GST = ''[[Goods and Services Tax (Singapore)|Goods and Services Tax]]''
Line 1,211 ⟶ 1,151:
|-
| {{Flagu|Switzerland}}
|
| 3.
| MWST = ''Mehrwertsteuer'', TVA = ''Taxe sur la valeur ajoutée'', IVA = ''Imposta sul valore aggiunto'', TPV = ''Taglia sin la Plivalur''
|-
Line 1,282 ⟶ 1,222:
| {{Flagu|United Kingdom}}
| {{nts|20}}%<ref>{{cite news |url=https://www.bbc.co.uk/news/10373992|title=Budget: How the rise in VAT will work|date=23 June 2010 |work=BBC News|access-date=2 November 2010}}</ref><br />0% in [[Guernsey]] and [[Gibraltar]] <small>(not part of [[European Union VAT area|EU VAT area]])</small>
| {{nts|5}}% residential energy/insulation/renovations, [[feminine hygiene]] products, [[child safety seat]]s and [[mobility aid]]s and 0% for life necessities{{snd}}basic food, water, [[prescription medication]]s, [[medical equipment]] and [[medical supply]], public transport, children's clothing, books and periodicals.
| VAT
TAW = [[Value Added Tax (United Kingdom)|Value Added Tax]]
Line 1,301 ⟶ 1,241:
|
|?
|-
| {{Flagu|Venezuela}}
| 12%
| 11%
| IVA = ''Impuesto al Valor Agregado''
|-
| {{Flagu|Vietnam}}
Line 1,306 ⟶ 1,251:
| 5% or 0%
| GTGT = ''Giá Trị Gia Tăng''
|-
| {{Flagu|Zambia}}
Line 1,456 ⟶ 1,396:
|-
|}
==See also==
* [[Excise]]
* [[Flat tax]]
Line 1,543 ⟶ 1,445:
==External links==
* {{wiktionary-inline|value added tax}}
*
{{Authority control}}
| |||