TOP 9 – Lowest VAT rates in the world 2018





Lowest sales taxes in the world. Which country has the lowest VAT-rate in the world? Which countries have no VAT at all? How low is the sales tax in Aruba?

The list consists of the standard VAT rates, some regions and territories have reduced VAT rates which are even lower. The standard VAT rate is the sales tax most products and services have in a country. Before we begin the list with the VAT paradises of the world, we must first discuss the difference between sales tax and VAT.

Sales tax vs VAT

For the consumer sales tax and VAT looks the same. It is a percentage tax added on top of the price. From a business and tax authority perspective, the main difference is that VAT is collected on all stages until it reaches the end consumer. Producer A sells with X% VAT to Middleman B, which can deduct the X% VAT and resell with X% VAT until the consumer which cannot deduct it and the chain ends. A sales tax is only applied b the last company in the chain to the private consumer. For the purpose of this article showing which countries consumers pay the least VAT the difference between sales tax and VAT is negligible and the terms can be used interchangeably.

Lowest Sales- and VAT-tax rates in the world

What is the lowest VAT rate in the world?

Lowest sales tax rates in the world


*Singapore will raise GST to 8% in April 2018.

Detailed sales tax table with sources

COUNTRY VAT RATE EY Momsens Other source
Aruba

1.50

Confirmed
Andorra

4.50

Confirmed
Canada

5.00

Confirmed
Nigeria

5.00

Confirmed
Saudi Arabia

5.00

Confirmed
Taiwan

5.00

Confirmed
United Arab Emirates

5.00

Confirmed
Yemen

5.00

Confirmed
Malaysia

6.00

Confirmed
Panama

7.00

Confirmed
Singapore

7.00

Confirmed
Thailand

7.00

Confirmed
Bahamas

7.50

Confirmed
Liechtenstein

7.70

Confirmed
Switzerland

7.70

Confirmed
Iran

8.00

Confirmed
Japan

8.00

Confirmed
Fiji

9.00

Confirmed

Guam was removed from the table since it has no general sales tax imposed on the consumer with the exception of admissions, use, and hotel occupancy taxes. Some sources list 4% Guam sales tax, but this is just an extra 4% tax business pay on their profit, it is not added to the receipts to private consumers.

Micronesia was not included since they have a business gross receipts tax (which means they pay 5% tax on the total sales but it does not affect the consumer, only the seller).

Eritrea was excluded since they have 4 standard rates 3%, 5%, 10% and 12%.

Further reading:

Tradingeconomic.com – sales tax rates

EY – Worldwide VAT and GST tax guide

Avalara VAT News

Wikipedia – Countries by tax rate

Countries and territories without sales tax

Akrotiri and Dhekelia, Anguilla, Bermuda, British Virgin Islands, Brunei, Cayman Islands, Gibraltar, Guernsey, Hong Kong, Iraq, Kiribati, Kuwait, Liberia, Libya, Macau, Maldives, Marshall, Islands, Montserrat, Nauru, Oman, Palau, Pitcairn Islands, Qatar, Saint Helena, Ascension and Tristan da Cunha, San Marino, Sao Tome and Principe, Solomon Islands, Somalia, South Georgia and the South Sandwich Islands, South Sudan, Syria, Timor Leste Turks and Caicos Islands, Tuvalu, USA (Alaska, Delaware, Montana, New Hampshire, Oregon, 13 more states have local sales tax of less than 5%) and a few more special territories.

TOP 6 – Highest VAT rates in the world





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