GST vs VAT: what is the difference?
GST and VAT are close cousins — both are consumption taxes added at the point of sale — but the name, rate and rules shift by country.
Same idea, different name
GST (Goods and Services Tax) and VAT (Value Added Tax) both work the same way: a percentage is added to the price of most goods and services, collected by businesses, and remitted to the government. Which name is used just depends on the country — Australia, Canada, New Zealand and Singapore say GST; the UK, EU and most other countries say VAT.
Where the rates differ
Australia’s GST is a flat 10%. The UK’s standard VAT rate is 20%, with reduced rates for some categories. Rates and exemptions vary widely by country — which matters if you sell to customers overseas or run a business with an international footprint.
What stays the same
In both systems, registered businesses add the tax to what they charge, can generally claim back what they paid on business purchases, and remit the net figure on a regular schedule. Understanding one system makes the other easy to follow.
Common questions
Is GST the same as sales tax?
Not quite — US-style sales tax is usually charged once, at the final sale to the consumer. GST/VAT is charged at each stage of the supply chain, with businesses claiming back what they paid along the way.
Which countries use GST and which use VAT?
Australia, Canada, New Zealand, Singapore and India use "GST". The UK, the EU and most other countries use "VAT". The underlying mechanism is the same consumption tax.
How do I compare rates across countries?
The free tax-rates and compare tools list current GST/VAT rates side by side for dozens of countries, sourced to each government authority.
More on tax & compliance
A Business Activity Statement (BAS) reports the GST you have collected and paid to the ATO, usually every quarter. Here is what actually happens, step by step.
Tax deductions for sole traders: what you can actually claimSole traders can generally claim any expense genuinely incurred in running the business. Here are the categories that come up most often.
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