Scope of Book

The value added tax (VAT) has spread around the world more quickly than any other new tax in modern history. This book covers value added tax and, in some parts, other consumption taxes in use or proposed in developing and developed countries.

Tax on consumption generally refers to a tax on final consumption, consisting mainly of goods and services acquired by individuals for their personal use or satisfaction. It generally does not include business inputs (goods and services used by business in the production or distribution of goods or in the rendition of services).

It is difficult for a business to operate internationally without considering the implications of sales tax or value added tax, whether or not the company’s country of residence has a broad-based tax on consumption. For example, the United States does not have a sales tax or value added tax, except at the state and local levels of government. Nevertheless, a U.S. business operating in, shipping goods or transferring intellectual property or providing or receiving services to and from other countries must consider the VAT implications of exports to or imports from those countries.

This book explores value added and other consumption tax principles from a comparative perspective. We hope that this study may lead to suggestions for improving existing VAT systems and designing new ones. We discuss VAT in the Member States of the European Union (EU), and explain major departures from the EU model in non-European countries (especially in New Zealand, China, Japan, and South Africa).