Countries with the highest sales tax

16 August 2018 (Last Updated February 4th, 2020 06:18)

Most countries in the world have some form sales taxes or value-added taxes (VAT), levied by the government on certain goods and services. Laws usually allow or require the seller to collect these taxes from the consumer at the point of purchase and some do provide for the exemption of certain goods or services. The amount charged varies between countries, but which impose the highest sales tax?

Countries with the highest sales tax
Which countries impose the highest sales tax? Credit: Pixabay

1. India

Sales tax rates in India range from 0% to 40%, with rates of 5%, 18%, 28% in between, varying for 1,211 different types of items and services. India has a dual government structure with union level and state level governments, each of which follows a separate but inclined taxation policy. These include Central Sales Tax Act 1956 and state government taxes. To avoid double taxation, the state governments offer certain tax exemptions. These include resale of goods/products where there is a genuine state resale certificate, sales made to schools or charities, and specific essential and local products. India currently has the highest sales tax in the world.

2. Hungary

Hungary’s highest sales tax stands at 27% of the total sales value. The sales tax was increased from 18% as from January 1, 2012. However, there is an exemption on some products, such as medicinal products and some food products, which are charged at 22% sales tax, and a tax of 18% is imposed on the provision of internet, catering and baking services.

3. Brazil

In Brazil, average state VAT is 17% and inter-state supplies within Brazil (ICMS) are subject to a sales tax of 4%-25%. This varies from city to city; for example in Sao Paulo the standard rate is 18%, while in Rio de Janeiro the rate is 19%. A reduced rate of 7% is taxed for basic food products, while certain products are exempt from VAT, including books, newspapers, fruit and vegetables. Exports are also exempt from VAT.

4. Croatia

The government of Croatia imposes a 25% sales tax on the goods sold and services provided in the country. However, some goods are subject to a lower standardised sales tax. Goods that are subjected to 13% sales tax instead of the standard 25% include milk, bread, newspapers, books, medicines, and journals. Hotel services are also exempted from the standard tax.

5. Denmark

Denmark imposes a non-deductible VAT of 25%. The VAT in the country is generally applied at one rate and with few exceptions is not split into two or more rates as in other countries, where reduced rates apply to essential goods. A number of services have reduced VAT, for instance, public transportation of private persons, health care services, publishing newspapers, rent of premises, and travel agency operations.

6. Norway

Highest sales tax in Norway stands at 25%, the standard general rate applied during the taxation of all the goods and services that are consumed and provided in Norway. However, a few goods such as foodstuffs are subjected to a reduced sales tax of 15%. Services such as public transport and provision of network services in Norway have a reduced sales tax, which usually stands at 8%.

7. Sweden

The sales tax subjected to goods and services in Sweden stands at 25%. There is an exemption for certain specified goods and services, including foods and medicinal products which are subject to a 12% sales tax. The services that are exempt from the standard sales tax include public transport and hotel services.

8. Finland

In Finland, VAT is levied at a standard rate of 24%, and two reduced rates of 14% on food, restaurant services, catering services and animal feed, and 10% on books, pharmaceutical products, services creating opportunities for physical exercise, passenger transportation and accommodation. Excise taxes are in place for alcohol, tobacco, sweets, lotteries, insurances, transport fuels and automobiles.

9. Greece

Greece imposes VAT between 6% and 24%. For all goods not belonging to any special category, the VAT is 24%; for Category 1 goods, the VAT is 13%, while for Category 2 goods it is 6%. Medical services and education items are exempt from VAT. There is also VAT reduction for Category 1 goods to 17% on some Greek Islands.

10. Iceland

In Iceland, the standard rate of sales tax is 24%. All foodstuff carry 7% VAT, as do subscription fees, the sale of magazines, music CDs, books, the sale of hot water, electricity and fuel for heating houses and swimming pools. Restaurant and hotel services carry 11% VAT. Some items are exempt from VAT, including health services and social services, lotteries and betting pools.