Highest and Lowest VAT Rates in Europe and Asia
Contributed by BridgeWest
22 August, 2017
The standard VAT rates vary across both Europe and Asia. In Europe, Hungary has the highest VAT value, at a 27%, followed by Norway, Croatia, Denmark and Sweden with 25%, Finland, Iceland and Greece with 24%. The lowest VAT rate in Europe is in Switzerland, with an 8% rate (and an even lower 2.5% rate for selected services). In Asia, Armenia has the largest rate (20%), followed by Georgia, Azerbaijan and Turkey with 18%, while India has a 12.5-15.5% rate. Japan has the lowest rate, at 5%, however, Hong Kong, UAE and others do not impose value added tax at all. When choosing the most suitable jurisdiction to base their business, investors will look at the highest and lowest VAT rates in Europe and Asia. We highlight four different jurisdictions and the VAT rate they impose.
VAT in Malaysia
Malaysia imposes a goods and services tax (the GST) instead of VAT. It has a low standard value of 6% and it is imposed at each stage in the supply chain, for the taxable goods and services, as performed by Malaysian companies. A number of goods and services are taxed at the standard rate, while others are exempt from this tax. Examples of goods and services that are not subject to the GST include: private health services, private educational services, financial services, life insurance and residential buildings.
Taxable companies and individuals register for GST and they must submit returns following the one month or three-month taxable period, as applicable for their business.
The value added tax in the UK
The value added tax in the United Kingdom is levied at a standard rate of 20% and a reduced one of 5% applies for certain goods and services. A zero-rate applies in the case of most foodstuffs, books, newspapers, selected health and welfare services, etc. It is imposed on the majority of goods and services provided/offered in the UK and also on imports and selected services. Companies in the UK must register for VAT purposes if their taxable turnover exceeds 82,000 GBP within a 12-month period.
Companies that fail to comply with the VAT registration or reporting requirements can be accused of business crime. Those who need legal assistance in this matter can request the help provided by a local lawyer.
VAT in the Netherlands
The Netherlands imposes a standard value added tax of 21% and a reduced rate of 6% for common products like food and drinks and services like medicine, art, the acquisition and import of selected goods or hotel accommodation. Some labour-intensive services may also be subject to a reduced rate. A zero rate applies for goods that are being transported to another EU member state and exemptions from VAT also include services related to cross-border transactions and to the international transport of passengers.
All taxpayers that are subject to VAT must register; there is no particular threshold for VAT registration in the Netherlands. VAT filing and payment are submitted on a monthly or quarterly basis.
Value added tax in Germany
Germany has a standard value added tax rate of 19%, with a lower rate of 7% for basic services and consumer goods like foodstuffs, books, newspapers, and magazines, entertainment or hotel accommodation. A zero-rate applies to intra-EU supplies, exports to non-EU countries or cross-border goods transports to and from non-EU countries. The VAT exempt activities in Germany include financial or insurance services, health and social welfare services, educational and cultural services and others.
In Germany, the VAT tax assessment period is the same as the calendar year. Taxpayers file preliminary monthly returns in those cases where the VAT does not exceed 7,500 EUR/ quarterly basis.
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