Al Jazeera Net correspondents
Sales tax is a consumption tax imposed by the government on the exchange of goods and services. It is a regressive and indirect tax imposed on the basis of consumption, rather than on the basis of a person’s contribution to the economy like an “income tax”, and some countries also know it as a goods and services tax (GST).
Many countries in the world also use “value added tax” (VAT) as a synonym, alternative, or more developed form of this tax.
An important source of government revenue
- Is sales tax an important source of government revenue in most countries of the world?
- Traditional sales tax is charged at the point of sale, collected by the retailer, and then passed on to the government, with authorities only receiving tax revenue when a sale is made to the end consumer.
- Sales tax is usually a percentage of the purchase price added to the final cost of the product or service.
- The sales tax rate varies depending on location, as its rates vary from one state to another, and sales tax revenues are used to finance various government programs and services such as education, transportation, health care, etc., according to Reuters.
Tax exemptions
In theory, sales tax applies to all retail transactions – or sales to the final consumer – but many countries exempt some consumables that they consider necessary and essential, such as bread or vegetables, from sales tax.
Some states apply lower tax rates on grocery items or utility items, as a way to provide tax relief to low-income earners.
Other countries apply a higher tax rate to goods and services that are primarily consumed by tourists, such as hotels, rental cars, or tourist restaurants, with the aim of “exporting” part of the sales tax to foreigners and citizens of other countries, according to the previous source.
Excise taxes
Excise taxes are a unique form of retail sales tax imposed on a specific good or activity.
These taxes are usually imposed on cigarettes, alcoholic beverages, soft drinks, insurance premiums, entertainment activities, betting, etc., and form part of tax collections at the state level.
Value added tax and what is the difference between it and sales tax?
Indirect taxes such as value-added tax and sales tax are government tools for raising revenue, however they differ in application and mechanism.
- VAT is applied at various stages of production, while sales tax is only charged at the final sale.
- Value-added tax is a multi-stage system, while sales tax is implemented in one stage.
- VAT is difficult to evade because it is collected gradually, while sales tax can be evaded.
- The final consumer bears the tax burden in both taxes.
The top 10 countries in the world that pay sales tax in 2024
The following is a list of the top 10 people in the world who paid sales tax until December 2024, according to the “Trading Economics” platform:
1- Bhutan: 50%
2- Hungary: 27%
3- Denmark: 25%
4- Norway: 25%
5- Sweden: 25%
6- Croatia: 25%
7- Greece: 24%
8- Finland: 24%
9- Iceland: 24%
10- Portugal: 23%
The 10 countries that pay the least sales tax in the world in 2024
The following is a list of the 10 peoples in the world who will pay the least sales tax in 2024, according to the previous source:
1- Guam: 2%
2- Aruba: 4%
3- Andorra: 4.5%
4- Sultanate of Oman: 5%
5- United Arab Emirates: 5%
6- Canada: 5%
7- Eritrea: 5%
8- Micronesia: 5%
9- Myanmar: 5%
10- Taiwan: 5%
The top 10 Arab countries paying sales tax in 2024 according to the previous source:
The following is a list of the top 10 Arab countries that impose sales tax, according to the previous source:
Note that some Arab countries use “value-added tax” as a synonym or alternative to sales tax, such as Saudi Arabia, Egypt, Bahrain, and Morocco, while other countries use “sales tax” such as Jordan. As we explained previously, the two are synonymous terms that are similar in many matters but differ in the method and their results. The final one is to extract a certain tax from the consumer when purchasing goods and services.
It is also noted that some countries do not impose sales tax or value-added tax, such as Qatar and Kuwait.
1- Morocco: 20%
2- Algeria: 19%
3- Tunisia: 19%
4- Sudan: 17%
5- Jordan: 16%
6- Mauritania: 16%
7- Saudi Arabia: 15%
8- Egypt: 14%
9- Lebanon: 11%
10- Bahrain and Somalia: 10%
