A Guide to VAT and Taxes Outside of the EU

For 20 years we have had online sales, and each year the total amount spent online is increasing. At the end of 2015, it reached a massive £14 trillion. Of course, online sales mean that we can tap into the international markets – stretching over the EU and into countries that are not part of it. Places such as the Middle East, India, and even North and South America. The thing we have to remember, however, is that VAT and taxes outside of the EU are different. Here, we will go through some of the taxes you are expected to pay when selling overseas, as well as rates and thresholds for some of the most popular countries.

What You Are Expected to Pay

There are several taxes you will need to pay when you are selling overseas, and it is essential to know what they are.

VAT (Value Added Tax). The first and most well-known payment you need to make on items is VAT. The rate varies from country to country, but it is something you will nearly always have to pay. Sometimes, you can claim is back at the end of the tax year, depending on what you purchased.

GST (Goods and Sales Tax). This tax can vary from country to country and is a form of multi-level value added tax. Currently, it is in countries such as Canada and New Zealand, with India looking to join on 2017. In many countries this replaces the Sales Tax and has been seen as a controversial introduction.

Sales Tax. This is a consumption tax that is implemented by the government. Conventionally, it is collected at the point of sale by the retailer before being passed onto the government. Countries such as the USA have this tax readily implemented.

Rates and Thresholds

The threshold for VAT in the United Kingdom is £83,000 in a 12-month period. The threshold for goods and services taxes is around $75,000 per annum, but this can vary from country to country. The same applies to sales tax.

Here is a list of rates for VAT, GTS, and sales tax from some of the most popular countries for international sales and business as well as a global VAT table courtesy of VATGlobal.com.

Australia VAT Rate: 10% GST

Bangladesh VAT Rate: 15% VAT

9% reduced VAT on: advertising

6% reduced VAT on: commercial renting

5% reduced VAT on: domestic electricity

4.5% reduced VAT on: professional services

2.25% reduced VAT on: hospital and cleaning services

1.5% reduced VAT on: land and construction developments

Brazil VAT Rate: 17% to 19%. GTS depending on state

12% reduced GTS rate on inter-state supplies

7% reduced GTS rate on designated remote states transactions

0% GTS rate on e-commerce

Canada Rates:

Local Province Sales Tax (PST) plus 5% Federal GST = Harmonised Sales Tax (HST)

Alberta: 0% PST + 5% Federal GST = 5%
British Columbia: 7% PST + 5% Federal GST = 12%
Manitoba: 8% PST + 5% Federal GST = 13%
New Brunswick: 10% PST + 5% Federal GST = 15% HST
Newfoundland: 10% PST + 5% Federal GST = 15% HST
Northwest Territories: 5% GST
Nova Scotia: 10% PST + 5% Federal GST = 15% HST
Ontario: 8% PST + 5% Federal GST = 13% HST
Prince Edward Island: 10% PST + 5% Federal GST = 15% HST
Quebec: 9.975% PST + 5% Federal GST = 14.975%
Saskatchewan: 5% PST + 5% Federal GST = 10%
Yukon: 5% GST

China VAT Rate:

11% – retail; entertainment; hotel; restaurants; catering services; real estate and construction, telephony calls; postal; transport and logistics

6% – financial services and insurance; telephony and internet data; IT; Technology; Consulting; Broadcast

The above taxes replaced the old 5.5% Business Tax in a reform lasting between 2012 and May 2016.

Other Chinese Consumption Tax rate

3% Chinese National Education

2% Chinese Local Education Taxes

7% City Maintance & Construction Taxes

Egypt VAT Rate: 10% General Sales Tax

100% higher General Sales Tax rate on: alcohol; tobacco

45% higher General Sales Tax rate on: powerful cars

25% higher General Sales Tax rate on: Audio visual equipment; air conditioners

15% higher General Sales Tax rate on: telecoms services

5% reduced General Sales Tax rate on: coffee; soap

Hong Kong VAT Rate: No VAT implemented.

India VAT Rate: VAT 12% to 15% depending on State

Service Tax 15%

CENVAT (Central VAT) is made up of 12% rate + 3% Education Excess on the 12% = 12.36 since March 2012
VAT 12.5% to 16% (Reduced Rates 1% to 5.5%; Higher Rate of 20% to 30%)

New Zealand VAT Rate: 15% GST (1 Oct 2010)

9% reduced VAT rate on: long term accommodation

Taiwan VAT Rate: 5%

15% higher VAT rate on: entertainment and restaurants

25% higher VAT rate on: establishments providing female meeting services

3% reduced VAT rate on: foreign investment company services

2% reduced VAT rate on: financial services

1% reduced VAT rate on: reinsurance services

To Conclude

It is essential to know about the types of tax you need to pay and how much you will be spending. Hopefully, this guide has given you a good idea about the costs associated with international sales outside of the EU.

StarterPad Staff

One of the lovely StarterPad staff members has toiled away into the wee hours of the night to write this amazing piece of literature :)