Consumption Tax Trends 2016 VAT/GST and excise rates, trends and policy issues (eBook)

Foreword 5
Table of contents 7
Acknowledgements 11
Executive summary 13
Key trends 13
Key findings 14
Chapter 1. Taxing consumption 15
1.1. Introduction 16
1.2. Classification of consumption taxes 17
1.3. Evolution of consumption tax revenues 18
Figure 1.1. Average tax revenue as a percentage of total taxation, by category of tax 2014 18
Figure 1.2. Share of VAT as a percentage of total taxation 2014 19
Figure 1.3. Share of consumption taxes as percentage of total taxation 1966-2014 20
Figure 1.4. Evolution of the tax mix 1965-2014 20
1.4. Spread of VAT 21
Figure 1.5. Number of countries having implemented a VAT 1960-2016 21
1.5. The main features of VAT design 21
A tax on final consumption 21
The staged collection process 22
Neutrality 23
1.6. Main design features of Retail Sales Taxes 24
1.7. Main characteristics of consumption taxes on specific goods and services 25
1.8. VAT and international trade – The destination principle 26
Implementing the destination principle 27
The International VAT/GST Guidelines 32
1.9. Tackling the VAT compliance gap 35
References 38
Annex 1.A1. Data on taxing consumption 40
Table 1.A1.1. Consumption taxes (5100) as percentage of GDP 41
Table 1.A1.2. Consumption taxes (5100) as percentage of total taxation 42
Table 1.A1.3. Taxes on general consumption (5110) as percentage of GDP 43
Table 1.A1.4. Taxes on general consumption (5110) as percentage of total taxation 44
Table 1.A1.5. Taxes on specific goods and services (5120) as percentage of GDP 45
Table 1.A1.6. Taxes on specific goods and services (5120) as percentage of total taxation 46
Table 1.A1.7. Value added taxes (5111) as percentage of GDP 47
Table 1.A1.8. Value added taxes (5111) as percentage of total taxation 48
Table 1.A1.9. Tax structures in the OECD area1 49
Table 1.A1.10. VAT relief for low value imports1 50
Box 1.A1.10. Country notes 51
Table 1.A1.11. Mechanisms for collecting VAT on cross-border supplies of services and intangibles from non-resident suppliers (“inbound supplies”) (cont.) 52
Box 1.A1.11. Country notes 54
Table 1.A1.12. Application of domestic reverse charge and split payment mechanisms 55
Table 1.A1.13. Import/export of goods by individual travellers 61
Chapter 2. Value added taxes: Rates and structure 69
2.1. Introduction 70
2.2. The evolution of standard rates and reduced rates 70
Figure 2.1. Evolution of standard VAT rates – OECD average 1976-2016 71
Figure 2.2. Standard rates of VAT in OECD countries, 2016 72
2.3. Exemptions 73
2.4. Restrictions to the right to deduct VAT on specific inputs 75
2.5. Registration and collection thresholds 76
2.6. Application of margin schemes 78
2.7. Technical note – Rationale and impact of reduced VAT rates 78
Equity objectives 79
Other policy objectives 80
The application of reduced rates as part of wider tax policy 82
References 82
Annex 2.A2. Data on VAT rates and structures 84
Table 2.A2.1. VAT rates 85
Box 2.A2.1. Country notes 86
Table 2.A2.2. Application of lower VAT rates 87
Table 2.A2.3. Annual turnover concessions for VAT registration and collection (domestic businesses) 91
Box 2.A2.3. Country Notes 92
Table 2.A2.4. VAT Exemptions 94
Table 2.A2.5. Restrictions to the right to deduct VAT on specific inputs1 (cont.) 98
Table 2.A2.6. Usage of margin schemes 101
Chapter 3. Measuring performance of VAT 103
3.1. Introduction 104
3.2. What does the VRR measure and how is it calculated? 104
What does the VRR measure? 104
Assessing the tax base 105
The formula used to estimate the VRR of OECD countries 106
3.3. The VRR estimates for OECD countries 106
Figure 3.1. VAT Revenue Ratio in OECD countries 2014 107
3.4. How to interpret the VRR estimates? 108
Factors that may influence the VRR 108
Assessing the relative impact of the various factors that may impact the VRR 110
3.5. Technical notes 111
Differences between final consumption expenditure and the VAT base that may influence the VRR 111
The VAT treatment of public sector activities 114
The VAT exemption of financial services 117
References 118
Annex 3.A3. VAT Revenue Ratio 119
Table 3.A3.1. VAT Revenue Ratio (VRR) 120
Chapter 4. Selected excise duties in OECD countries 121
4.1. Introduction 122
4.2. Key characteristics and revenue trends 122
Ad valorem vs. ad quantum excises 123
Excises as instruments to influence behaviour 124
4.3. Alcoholic beverages 125
4.4. Tobacco products 126
4.5. Mineral oil products 128
4.6. Impact on cross-border trade 129
4.7. Distributional impact of excise 130
References 130
Annex 4.A4. Data on excise rates 132
Table 4.A4.1. Taxation of beer 133
Box 4.A4.1. Country notes 135
Table 4.A4.2. Taxation of wine 138
Box 4.A4.2. Country notes 139
Table 4.A4.3. Taxation of alcoholic beverages 141
Box 4.A4.3. Country notes 142
Table 4.A4.4. Taxation of tobacco 144
Box 4.A4.4. Country notes 145
Table 4.A4.5. Tax burden as a share of total price for cigarettes1 147
Technical note to Table 4.A4.5. Calculation of the total tax burden (TTB) 148
Table 4.A4.6. Taxation of premium unleaded (94-96 RON) gasoline (per litre), 20151 149
Box 4.A4.6. Country notes 150
Table 4.A4.7. Taxation of automotive diesel (per litre), 20151 151
Box 4.A4.7. Country notes 152
Table 4.A4.8. Taxation of light fuel oil for households (per litre), 20151 154
Box 4.A4.8. Country notes 155
Table 4.A4.9. Excises (5121) as percentage of total taxation 157
Chapter 5. Taxing vehicles 159
5.1. Introduction 160
5.2. Car taxation and polluting emissions 161
5.3. Taxes on purchase and registration of motor vehicles 162
5.4. Periodic taxes in connection with ownership or use of motor vehicles 163
References 163
Annex 5.A5. Data on car taxation 164
Table 5.A5.1. Taxes on sale and registration of motor vehicles 165
Table 5.A5.2. Taxes on ownership or use of motor vehicles 175
Annex A. Countries with VAT 183
Countries and territories operating a VAT 183
Annex B. Statement of outcomes on the OECD International VAT/GST Guidelines 187
Annex C. Exchanges rates 189
Exchange rates 190
Annex D. Cigarettes – Most sold brands (MSB) in OECD Countries 191
Cigarettes – Most sold brands (MSB) in OECD Countries 191