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Consumption Tax Trends 2
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Consumption Tax
VAT/GST AND EXCISE RATES, TRENDS AND
ADMINISTRATION ISSUES Trends
This publication presents information about VAT/GST and excise duty rates in OECD member
countries. It provides information about indirect tax topics such as international aspects of VAT
VAT/GST AND EXCISE RATES,
development and application of VAT to small and medium-size enterprises. It also describes a range
of taxation provisions in OECD member countries, such as the taxation of motor vehicles, tobacco C TRENDS AND ADMINISTRATION
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and alcoholic beverages. Finally, it presents the structure and excerpts of the International VAT/GST
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Guidelines. S ISSUES
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2006 2006
Consumption Tax Trends
VAT/GST AND EXCISE RATES, TRENDS
AND ADMINISTRATION ISSUES
2006 Edition
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
The OECD is a unique forum where the governments of 30 democracies work together to
address the economic, social and environmental challenges of globalisation. The OECD is also at
the forefront of efforts to understand and to help governments respond to new developments and
concerns, such as corporate governance, the information economy and the challenges of an
ageing population. The Organisation provides a setting where governments can compare policy
experiences, seek answers to common problems, identify good practice and work to co-ordinate
domestic and international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea,
Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic,
Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of
the European Communities takes part in the work of the OECD.
OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and
research on economic, social and environmental issues, as well as the conventions, guidelines and
standards agreed by its members.
This work is published on the responsibility of the Secretary-General of the OECD. The
opinions expressed and arguments employed herein do not necessarily reflect the official
views of the Organisation or of the governments of its member countries.
Also available in French under the title:
Tendances des impôts sur la consommation
TVA/TPS et droits d’accise : taux, tendances et questions d’administration
© OECD 2006
No reproduction, copy, transmission or translation of this publication may be made without written permission. Applications should be sent to
OECD Publishing: [email protected] or by fax (33 1) 45 24 13 91. Permission to photocopy a portion of this work should be addressed to the Centre
français d'exploitation du droit de copie, 20, rue des Grands-Augustins, 75006 Paris, France ([email protected]).
FOREWORD
Foreword
T
his publication is the sixth in the series Consumption Tax Trends. It presents information
relative to indirect taxes in OECD member countries, as at 1January, 2005.
This biennial publication illustrates the evolution of consumption taxes as revenue instruments.
They now account for 30per cent of total tax revenues in OECD member countries. It identifies the
large number of differences that exist in respect of the consumption tax base, rates and implementation
rules while highlighting the features underlying their development. It also notes recent developments
in the Value Added Tax/Goods and Services Tax area.
This edition’s special features highlight aspects of developments in international issues on
taxation of services and intangibles under general consumption taxes and on emerging trends in the
VAT treatment of small and medium size enterprises (SMEs), including the measures taken by
governments to reduce compliance burdens and improve tax administration efficiency.
CONSUMPTION TAX TRENDS – ISBN 92-64-01417-9 – © OECD 2006 3
TABLE OF CONTENTS
Table of Contents
Introduction .............................................................................................................................. 7
Chapter 1. Taxing Consumption........................................................................................... 9
Chapter 2. Consumption Tax Topics.................................................................................... 17
Chapter 3. Value Added Tax/Tax on Goods and Services Yield, Rates and Structure..... 23
Chapter 4. Selected Excise Duties in OECD Member Countries....................................... 55
Chapter 5. Taxing Vehicles..................................................................................................... 71
Chapter 6. VAT Treatment of Small and Medium-sized Enterprises............................. 85
Annex 1. Exchange Rates .................................................................................................... 89
Annex 2. Extracts from the International VAT/GST Guidelines ................................... 90
Annex 3. Environmentally Related Taxes ........................................................................ 115
List of Figures
1.1. Average tax revenue as a percentage of aggregate taxation, by category of tax ........ 10
3.1. Standard rates of VAT .................................................................................................... 29
4.1. Taxation of alcoholic beverages excise duties per hectolitre of absolute alcool ......... 63
4.2. Excise on unleaded petrol .............................................................................................. 67
4.3. Excise taxes on diesel ..................................................................................................... 67
List of Tables
3.1. Taxes on general consumption (5110) as percentage of GDP ................................... 25
3.2. Taxes on general consumption (5110) as percentage of total taxation ................... 26
3.3. Taxes on specific goods and services (5120) as percentage of GDP ......................... 27
3.4. Taxes on specific goods and services (5120) as percentage of total taxation ......... 28
3.5. VAT/GST in OECD member countries ......................................................................... 30
3.6. Annual turnover concessions for VAT/GST registration and collection ................. 32
3.7. Exemptions ..................................................................................................................... 34
3.8. Coverage of different VAT rates .................................................................................. 36
3.9. Special VAT taxation methods .................................................................................... 44
3.10.Import/export of goods by individuals ....................................................................... 47
3.11.VAT revenues (5111) as percentage of total taxation ................................................ 52
3.12.C-efficiency ratio for VAT2003 ..................................................................................... 53
4.1. Taxation of beer .............................................................................................................. 57
4.2. Taxation of wine ............................................................................................................. 59
4.3. Taxation of alcoholic beverages ................................................................................... 61
4.4. Taxation of mineral oils (per 1000litres of product at 15o C) .................................. 64
CONSUMPTION TAX TRENDS – ISBN 92-64-01417-9 – © OECD 2006 5
TABLE OF CONTENTS
4.5. Taxation of tobacco ........................................................................................................ 68
5.1. Taxes on sale and registration of motor vehicles ..................................................... 74
5.2. Taxes on use of motor vehicles .................................................................................... 80
A1.1.Table of exchange rates PPP .......................................................................................... 89
A3.1. Trends in revenues from environmentally related taxes 1995-2003
in percentage of GDP ...................................................................................................... 116
A3.2. Trends in revenues from environmentally related taxes1995-2003
in percentage of total tax revenue ............................................................................... 117
6 CONSUMPTION TAX TRENDS – ISBN 92-64-01417-9 – © OECD 2006
INTRODUCTION
Introduction
C
onsumption taxes form an important source of revenue for an increasing number of
governments. On average, general consumption taxes (mainly value added taxes and sales
taxes) and specific consumption taxes (mainly excise duties) now account for 30% of all
revenue collected by governments across the OECD. Value added taxes1 (VAT) are the
principal form of taxing consumption in 29of the 30OECD member countries and account
for two thirds of consumption taxes revenues whilst specific consumption taxes raise one
third. This probably reflects a growing preference for broad-based taxation of the full range
of goods and services, as opposed to taxing specific goods. Increasingly excise is used as a
means of influencing consumer behaviour, with many countries imposing high rates of
excise on tobacco goods and oil products.
Value added tax policy
Since the publication of the2004 edition of Consumption Tax Trends, the OECD’s work on
electronic commerce and consumption taxes was largely concluded by the publication in
February2005 of the report Facilitating Collection of Consumption Taxes on Business-to-
Consumer Cross-Border E-Commerce Transactions. Most of the work in the international
consumption tax area is now focused on the broader issue of taxation of the cross-border
trade in services and intangibles.
The continuing globalisation of trade, especially in services and intangibles, continues
to impose pressure on the international aspects of value added tax systems. The Report on
Consumption Tax Obstacles to Cross-border Trade in International Services and Intangibles
released by the OECD in July2004 showed that the current inconsistencies in the VAT rules
across jurisdictions are hindering the development of international trade, generating
uncertainties, double taxation or involuntary non-taxation as well as opening up opportunities
for tax avoidance. Given the absence of internationally agreed rules and standards for the
treatment of cross-border supplies of services and intangibles, the OECD launched a public
consultation in2005. This consultation process confirmed general support for an international
norm based on taxation according to the rules applicable in the jurisdiction of consumption.
It was agreed therefore that the OECD should develop a set of guidelines that would aim to
minimise the problems identified.
In order to ensure greater coherence and transparency to the rules applicable to value
added taxation of international trade, the OECD will develop the International VAT/GST
Guidelines, which will include the work already done on e-commerce and current and
future work on cross-border trade in services and intangibles (see Annex 1).
1.This concept includes Value Added Taxes and Goods and Services Taxes but does not cover sales
taxes.
CONSUMPTION TAX TRENDS – ISBN 92-64-01417-9 – © OECD 2006 7
INTRODUCTION
Value added tax administration
Increasingly tax administrations are addressing the challenges posed by the need to
improve efficiency of tax administrations, to reduce compliance costs for business, in
particular for small and medium size enterprises and to minimise the potential for tax
evasion and avoidance.
Excise taxes and vehicle taxation
As in previous editions, Consumption Tax Trends reports on the excise taxes that
member countries levy on a number of specific products, including alcoholic beverages,
mineral oil products and tobacco products. It also provides a detailed survey of vehicle
taxes.
Environmentally related taxes
This edition provides an update of data on environmentally related taxes published in
the fifth edition. The OECD database on environmentally related taxes contains more
complete data. The database may be consulted free of charge at the following address:
www.oecd.org/env/policies/database.
8 CONSUMPTION TAX TRENDS – ISBN 92-64-01417-9 – © OECD 2006
