VAT Rates by Country: Global Comparison Guide 2026

Value Added Tax (VAT), known as IVA (Impuesto al Valor Agregado) in Spanish-speaking countries or GST (Goods and Services Tax) in Australia, Canada, India, and other countries, is an indirect consumption tax applied at each stage of the production and distribution chain. It is the most widely used tax in the world: more than 170 countries apply it, and in many of them it represents the largest source of tax revenue.

The fundamental principle of VAT is that each business in the supply chain pays tax only on the value it adds to the product or service, not on the total price. The manufacturer pays VAT on raw materials but can deduct that VAT when selling the finished product. In the end, the consumer bears the full cost of the tax.

How it works in practice:

• A farmer sells wheat to a mill for $100 + $21 VAT (21%). The farmer remits $21 to the government
• The mill sells flour to the baker for $200 + $42 VAT. But it deducts the $21 already paid. It only remits $21 to the government
• The baker sells bread to the consumer for $300 + $63 VAT. It deducts the $42 already paid. It remits $21 to the government
• Total collected by the government: $21 + $21 + $21 = $63, exactly 21% of the final price

There are countries that do not apply VAT at all, such as the United States (which uses a state-level sales tax, not a federal one), and countries that apply it at very low or very high rates. Understanding these differences is crucial for international trade, travel, and cross-border online shopping.

Europe has the highest VAT rates on the planet. The European Union requires a minimum of 15% from all its members, but most apply much higher rates. Here are the current standard rates:

Country	Standard rate	Reduced rate	Notes
Hungary	27%	5%, 18%	Highest rate in the EU and the world
Denmark	25%	None	Single rate with no reductions
Sweden	25%	6%, 12%	Reduced for food and culture
Norway	25%	12%, 15%	Non-EU but similar rate
Croatia	25%	5%, 13%	Reduced for tourism
Finland	25.5%	10%, 14%	Increased from 24% in 2025
Greece	24%	6%, 13%	Islands with special rates
Portugal	23%	6%, 13%	Azores and Madeira with reduced rates
Poland	23%	5%, 8%	Reduced for basic food
Italy	22%	4%, 5%, 10%	Multiple reduced rates
Spain	21%	4%, 10%	Super-reduced for bread, milk, medicine
France	20%	2.1%, 5.5%, 10%	Super-reduced for press and medicine
Germany	19%	7%	Reduced for food and books
Luxembourg	17%	3%, 8%, 14%	Lowest rate in the EU
Switzerland	8.1%	2.6%, 3.8%	Non-EU, very low for Europe

Important note: Reduced rates apply to specific products and services considered essential: basic food, medicine, books, public transport, and in some countries, cultural and hospitality services. Denmark is the notable exception with a single 25% rate for everything.

Latin America presents a wide range of VAT rates, generally lower than Europe but significant for the region's economies:

Country	Standard rate	Local name	Notes
Argentina	21%	IVA	Highest in LATAM. Reduced 10.5% for food
Uruguay	22%	IVA	Basic rate, with minimum rate of 10%
Brazil	~26.5%	IVA (2026 reform)	Tax reform unifying PIS/COFINS/IPI/ICMS/ISS into dual VAT
Chile	19%	IVA	Single rate with no general reductions
Peru	18%	IGV	General Sales Tax (16% IGV + 2% IPM)
Colombia	19%	IVA	Reduced 5% for certain goods. Basic basket exempt
Mexico	16%	IVA	Single national rate. Northern border at 8% (extended)
Dominican Republic	18%	ITBIS	Tax on Transfer of Goods and Services
Costa Rica	13%	IVA	Implemented in 2019, replaced sales tax
Ecuador	15%	IVA	Increased from 12% in 2024
Bolivia	13%	IVA	Included in the price (not added on top)
Paraguay	10%	IVA	One of the lowest in the region
Panama	7%	ITBMS	Lowest in continental LATAM

Regional particularities:

• Brazil is in the process of a historic tax reform unifying multiple taxes into a dual VAT system (federal and state), with gradual implementation between 2026 and 2033
• Several countries exempt the basic food basket from VAT (Colombia, Mexico, Peru)
• Mexico maintains a preferential 8% rate in the northern border zone to compete with the low US consumption tax

To calculate the impact of VAT on your purchases or sales, use our tax calculator.

VAT rates in Asia and Oceania tend to be lower than European ones, with some notable exceptions:

Asia:

Country	Rate	Name	Notes
India	5-28%	GST	4 slabs: 5%, 12%, 18%, 28%. Essential products at 0-5%
China	13%	VAT	Reduced 9% for agriculture and 6% for services
Japan	10%	Consumption Tax	Reduced 8% for food and non-alcoholic beverages
South Korea	10%	VAT	Single rate
Indonesia	12%	PPN	Increased from 11% in 2025
Vietnam	10%	VAT	Reduced 5% for essential goods
Thailand	7%	VAT	Legally 10% but temporarily reduced to 7%
Singapore	9%	GST	Increased from 8% in 2024
Malaysia	8%	SST	Sales & Service Tax reintroduced in 2018
Taiwan	5%	VAT	One of the lowest in Asia

Oceania:

• Australia: 10% GST. Fresh food, education, and health are exempt
• New Zealand: 15% GST. Few exempt products, single rate

Africa (selection):

• South Africa: 15% VAT. Basic food items exempt since 2018
• Nigeria: 7.5% VAT. One of the lowest on the continent
• Kenya: 16% VAT. Standard African rate
• Morocco: 20% TVA. Reduced rates of 7%, 10%, and 14%

Middle East:

• Saudi Arabia: 15% VAT. Implemented in 2018, tripled in 2020
• UAE: 5% VAT. One of the lowest in the world

Although most countries apply some form of VAT or consumption tax, there are territories that do not. Here are the main ones:

Countries with no VAT/GST/National Sales Tax:

Country/Territory	Region	Main reason
Hong Kong	Asia	Free-market economy, revenue from other taxes
Bahrain	Middle East	Implemented 10% VAT in 2022 (previously 5%)
Brunei	Asia	Oil revenues cover the budget
Cayman Islands	Caribbean	Tax haven, no direct or indirect taxes
Bermuda	Atlantic	No VAT but high import duties
Kuwait	Middle East	Plans to implement VAT but no date set
Macau	Asia	Similar to Hong Kong, service economy

The special case of the United States:

The US is the major economy without a federal VAT. Instead, 45 of the 50 states apply a Sales Tax charged only to the final consumer, not at each stage of the chain. Rates range from 0% (Oregon, Montana, Delaware, New Hampshire, Alaska) to 7.25% (California). Including local taxes, the effective rate can reach 10-11% in cities like Chicago or Seattle.

Why some countries have no VAT:

• Oil-rich nations: Hydrocarbon revenues fund the public budget without needing consumption taxes
• Tax havens: Attract capital and international business with zero-tax regimes, funding themselves through company registration fees and tariffs
• Microstates: Small economies that can operate on customs revenues and service fees
• Alternative fiscal policy: Like the US, which prefers direct taxes (income tax) as the main revenue source

VAT has a direct impact on the prices consumers pay and on the competitiveness of international trade. Understanding these effects is important for both consumers and businesses.

Impact on consumer prices:

The same product with a $100 base price has very different final costs depending on the country:

Country	VAT rate	Final price	Difference
Panama	7%	$107	+$7
Japan	10%	$110	+$10
Mexico	16%	$116	+$16
Spain	21%	$121	+$21
Sweden	25%	$125	+$25
Hungary	27%	$127	+$27

VAT on international online purchases:

• Since 2021, the EU charges VAT on all imports regardless of value. Previously there was a 22-euro exemption
• Major platforms (Amazon, AliExpress, Shein) charge the destination country's VAT at the time of purchase
• If you buy directly from a foreign store, you may have to pay VAT upon receiving the package at customs
• For B2B purchases between EU countries, the reverse charge mechanism applies: the buyer self-assesses VAT in their country

Tax-free shopping for tourists:

Many countries allow non-resident tourists to recover VAT on purchases made during their visit. In the EU, purchases must exceed a minimum (generally 50-175 euros) and are processed when leaving the country by showing receipts at customs. Companies like Global Blue and Planet Tax Free facilitate the process.

To quickly calculate VAT included or excluded from a price, use our tax calculator. And if you need to calculate discounts on VAT-inclusive prices, try the discount calculator.

VAT on digital services is one of the most complex and relevant tax topics in today's economy. If you sell software, online courses, ebooks, or any digital service, you need to understand these rules:

General rule: VAT is paid in the consumer's country

Since the EU reform in 2015 (and progressively adopted by other countries), digital services are taxed in the country where the customer is located, not where the company is based. This means a Spanish company selling to a German customer must charge 19% (German VAT), not 21% (Spanish VAT).

Countries with VAT rules for digital services:

• European Union: OSS (One-Stop Shop) system to declare VAT from multiple countries through a single point. Threshold of 10,000 euros annually for intra-community sales
• United Kingdom: 20% VAT for digital services to British consumers, no threshold
• Australia: 10% GST for foreign providers with sales exceeding AUD 75,000
• Japan: 10% Consumption Tax since 2015 for digital services from foreign providers
• Colombia: 19% IVA for digital services from abroad (Netflix, Spotify, etc.)
• Mexico: 16% IVA for digital services. Platforms act as withholding agents
• Argentina: 21% IVA on digital services, collected through credit card statements

Platforms as tax intermediaries:

Many jurisdictions require marketplace platforms (App Store, Google Play, Steam, Amazon) to act as VAT withholding agents. If you sell through these platforms, they handle collecting and remitting VAT. If you sell directly, the responsibility falls on you.

Useful tools for businesses: Platforms like Stripe Tax, TaxJar, and Avalara automate VAT calculation and remittance for online businesses selling to multiple countries.

The global VAT landscape is constantly evolving. Here are the most relevant trends that will shape the coming years:

Trend 1: General rate increases

After the COVID-19 pandemic and subsequent fiscal crises, many countries have increased their VAT rates to fund public spending. Finland increased from 24% to 25.5%, Indonesia from 11% to 12%, Singapore from 7% to 9%, and Ecuador from 12% to 15%. This trend will continue in countries with significant fiscal deficits.

Trend 2: Expansion of VAT to digital services

More countries are implementing rules to tax cross-border digital services. In 2020, only 40 countries had these rules; by 2026 there are more than 100. The main targets are streaming services, software, digital advertising, and e-commerce.

Trend 3: VAT in the cryptocurrency and NFT economy

The EU is advancing fiscal regulation of crypto-assets, including VAT treatment for cryptocurrency transactions. Currently, cryptocurrency exchange is VAT-exempt in the EU (Hedqvist case, 2015), but purchasing goods and services with crypto does generate VAT.

Trend 4: Mandatory electronic invoicing

More countries are requiring electronic invoicing as a fiscal control tool. Mexico (CFDI), Brazil (NF-e), Chile (DTE), India (e-Invoice), and Saudi Arabia (FATOORAH) already require it. The EU plans to implement a harmonized e-invoicing system by 2030.

Trend 5: Reduced VAT for sustainable products

Some European countries are implementing reduced VAT rates for eco-friendly products: solar panels, electric vehicles, second-hand products, and repairs. This aims to incentivize sustainable consumption through fiscal policy.

Stay informed about current rates using our tax calculator, which is updated with the most recent rates from each country.