Indirect taxes are booming. As they work to bring public finances under control, governments around the world are increasing VAT, excises and other indirect taxes. They see this as a straightforward way to raise additional revenue. To find out more, visit: http://tmagazine.ey.com/issue/issue-08/

1. The rise
of indirect tax
US$1,000,000,000,000
Amount that could be raised in the US by a European-style value–added
tax (VAT) system with a 20% standard rate
1954 France becomes the first
country to introduce VAT
1967 Brazil and Denmark introduce
VAT, soon followed by Germany,
Sweden and the Netherlands
69%
1969 Eight countries have introduced
VAT
133
Total size of GE’s global indirect
tax team, up from zero, 17 years ago
20%
The proportion of
tax policy-makers
who expect indirect taxes
to generate more revenue
in the future
1973 The UK, Austria and Italy
introduces VAT
1986 New Zealand introduce a goods
and services tax (GST)
The current standard VAT in Morocco,
compared with 16% in Kenya, 14% in
South Africa and 5% in Nigeria
1989 Japan becomes the 53rd country
to introduces a VAT system
22
21
20
19
2012
2010
2008
2006
2004
EU-27
2002
18
2000
Average standard VAT rate
Average VAT rates
across the EU-27
Source: Indirect Tax in 2012, Ernst & Young
1991 South Africa and Canada
introduce VAT, followed later
in the decade by Poland and Switzerland,
among others
2001 Worldwide, 129 countries now
have VAT
2006 A European Council Directive
requires Member States to have
a minimum VAT standard rate of 15%
and one or two reduced rates not to
be below 5%
Six global indirect tax trends
Rising VAT and GST rates
Broadening base for VAT
and GST
Refining of consumption
tax systems
Renewed efforts by tax
administrations on compliance
and avoidance, aided by use of
advanced technologies
Rising excise duties
Reducing customs duties,
arising from more free trade
2009 VAT receipts represent an
average 7.4% of gross domestic
product (GDP) among EU Member
States
18.7%
2010 The European Commission
releases a Green Paper recommending
“a broad-based VAT system, ideally
with a single rate”
2011 Hungary announces that its
standard VAT rate will rise to 27%
in 2012 – the highest in the EU
The average tax revenue
2012 Some form of VAT and GST
across the Organisation for
applies to 156 countries worldwide,
Economic Co-operation and
accounting for an average of 20% of
Development (OECD) that was total tax revenue
accounted for by VAT in 2012,
compared with 8.8% in 1975
Value added tax (VAT)
Country
Standard rate
in selected countries
Hungary
Sweden
United Kingdom
Germany
Russia
South Africa
Switzerland
Singapore (GST)
Japan (consumption tax)
United Arab Emirates
27%
25%
20%
19%
18%
14%
8%
7%
5%
0%
*2012
Source: HSBC Expat Explorer 2011, Atlas Corporate Relocation Survey 2011, Ernst & Young Global Mobility Effectiveness
Survey 2011, EIU — Up or out: Next moves for the modern expatriate 2010; graphic: Käthi Dübi
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