TOP 6 – Highest VAT rates in the world

Bhutan has the highest VAT rate in the world.

Highest VAT rates in the world. Which country has the highest sales tax? Which countries have the highest levels of VAT? What is the highest VAT per cent in Europe? Which EU-member has the highest VAT-rate? 

TOP 6 – World champions in VAT rates (Sales tax)

Bhutan has the highest VAT rate in the world.

Bhutan has the highest VAT rate in the world.

  1. Bhutan (50%)
  2. Djibouti (33%)
  3. Burma/Myanmar (30%)
  4. Hungary (27%)
  5. Denmark (25%)
  6. Norway, Sweden (25%)

The World champion in VAT is without competition the mini-country of Bhutan, with its ridiculously high VAT rate of 50%. The country is situated just north of Bangladesh, which in turn only has 15% VAT. Djibouti is second with 33% and is also a tiny country. It can be found on East Africa’s troubled corner close to Eritrea and Ethiopia. Myanmar, which is better known under the old name Burma enters the podium with their more modest 30% VAT level. Denmark (25%) ranks 5th as they only have a single VAT rate – all items, services and products have a 25% sales tax rate.

TOP 5 – Countries with the highest VAT rate in Europe

In Europe, we see the same trend as in the rest of the world, a shift from corporate tax to consumption tax. Governments are switching the tax pressure from the companies to the people because it’s easier and more reliable to tax consumers. The competition is fierce to attract investments from foreign companies, and every country feels a need to lower their tax levels for corporations, a fact which also drives this trend. Here is the top list of countries with the highest VAT rates in Europe:

  1. Hungary (27%)
  2. Denmark (25%)
  3. Norway, Sweden (25%)
  4. Croatia, Finland, Greece (24%)
  5. Ireland, Poland, Portugal (23%)

TOP 5 – European Union VAT level “leaders”

Top list with member states currently having the highest VAT rates within the EU:

  1. Hungary (27%)
  2. Denmark (25%)
  3. Sweden (25%)
  4. Croatia, Finland, Greece (24%)
  5. Ireland, Poland, Portugal (23%)

There are two main reasons for Hungary’s rise to the top of the VAT charts. The first is the financial crisis which led the Hungarian government to raise the VAT rate to restore the financial balance of the country. The second is that Hungary recently slashed the corporate tax rate to only 9%, partly financed by keeping the highest VAT rate in the European Union. It is under pressure to lower this rate from the EU because there is an indication the high VAT-rate is used to finance a very low corporate tax rate to unfairly compete with other EU-members about company investments.

Data source: Swedish article about the highest VAT rates in the world

The remaining EU countries and their VAT levels can be found here

1 Comment

  1. Tori

    I study the economy and tax system of Sweden. I knew that in Sweden taxes are one of the highest in the world. Thank you for the comparative analytics in your article, I really liked it!


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