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Australia
Introduced 2000. Introduced on 1 July 2000 by the Howard Coalition government at a flat 10%, the GST was the third attempt at an Australian consumption tax: Keating floated one at the 1985 Tax Summit (dropped after opposition) and Hewson built his 1991 "Fightback!" platform around it before losing the 1993 "unloseable election." Howard won the 1998 election calling it a "mandate for GST," and the revenue flows to the states.
A birthday cake helped sink a GST and an election: in 1993, Opposition Leader John Hewson couldn't say whether his proposed GST would make a birthday cake cheaper or dearer, fumbling about icing and candles on live TV.
The 3 March 1993 'birthday cake interview' with Mike Willesee on A Current Affair is widely blamed for Hewson losing the 'unloseable' federal election ten days later, on 13 March 1993; the GST didn't arrive until Howard finally legislated it seven years on.
Source: Wikipedia — Birthday cake interview ↗Australia's GST has been frozen at 10% for over 25 years, partly because changing the rate legally requires the unanimous agreement of every state and territory plus both houses of federal Parliament.
Treasury states plainly that 'legislation requires that changes to the GST base or rate require unanimous agreement by all State and Territory governments, as well as both houses of the Australian Parliament' — a political straitjacket flowing from the 1999 Intergovernmental Agreement that has kept the rate untouched since 1 July 2000.
Source: Australian Treasury — Tax White Paper, At a glance ↗Whether a frozen meal is taxed can hinge on a judge deciding what counts as a 'prepared meal' by common experience — and Simplot (maker of Birds Eye products) lost that argument in 2023.
In Simplot Australia v Commissioner of Taxation [2023] FCA 1115 the Federal Court ruled frozen vegetable-, rice- and pasta-based products were taxable 'prepared meals' or 'combination foods', applying 'common experience and common sense' about what an everyday meal is rather than the maker's own marketing.
Source: Grant Thornton — GST and food: Federal Court challenges the concept of a prepared meal ↗A tub of Chobani yoghurt became taxable purely because it came with a separate pouch of cookie and white-chocolate pieces — making it a 'combination food'.
In a 16 June 2023 ruling the Administrative Appeals Tribunal sided with the Tax Commissioner that Chobani's Flip Strawberry Shortcake yoghurt, sold with baked cookie and white-chocolate bits, was a taxable combination food rather than GST-free plain yoghurt.
Source: HWL Ebsworth — Case alert: Tribunal finds yoghurt combination not GST-free ↗Tampons were taxed at 10% as a non-essential item for nearly two decades while condoms, sunscreen and lubricant were GST-free — until the 'tampon tax' was finally scrapped in 2019.
After a campaign of nearly two decades, Commonwealth, state and territory treasurers unanimously agreed on 3 October 2018 to make menstrual products GST-free from 1 January 2019, giving up about $30 million a year in revenue.
Source: TIME — Australia Ditches Controversial 'Tampon Tax' After Outcry ↗
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New Zealand
Introduced 1986. GST was introduced on 1 October 1986 at 10% by Finance Minister Roger Douglas as a cornerstone of the Fourth Labour Government's free-market reforms known as "Rogernomics," replacing a complex, hard-to-administer wholesale sales tax (rates ranging from ~10% to 50%) with a simple broad-based consumption tax paired with offsetting income-tax cuts.
New Zealand's GST is one of the broadest consumption taxes in the world - it taxes almost everything, including food, with tax specialists noting that only Brazil runs a broader base.
Unlike most VAT systems that carve out food, books or medicine, NZ keeps exemptions to a tiny handful (financial services, residential rent, donated goods, precious metals), and Bloomberg Tax describes its GST as 'best in class,' noting only Brazil has a broader base because Brazil also taxes financial services.
Source: Bloomberg Tax ↗Because NZ taxes all food, it sidesteps the quirky tax-classification debates seen elsewhere - like the UK courts having to rule whether a Jaffa Cake is a cake or a biscuit, or whether a Pringle is a potato chip.
Deloitte NZ cites the UK Jaffa Cake and Pringle cases as exactly the boundary disputes NZ avoids by refusing to exempt any food category, warning that an NZ food exemption would create the same headaches (e.g. a chocolate-chip cookie GST-free but a chocolate-dipped biscuit taxed).
Source: Deloitte New Zealand ↗When Labour campaigned in 2023 to make fresh fruit and vegetables GST-free, nearly every tax expert RNZ surveyed - about a dozen - questioned it, including Don Brash, who chaired the 1985 committee that designed NZ's GST.
Economist Brad Olsen noted the Tax Working Group itself reckoned shoppers would be lucky to see 30% pass-through, with the rest pocketed by retailers; only one of the dozen experts RNZ approached offered even qualified support.
Source: RNZ ↗In 2010 New Zealand raised GST from 12.5% to 15% while simultaneously cutting income tax across the board and lifting pensions and benefits to compensate - an explicit switch from taxing earning to taxing spending.
From 1 October 2010 the top income tax rate dropped from 38% to 33%, every income bracket was cut, the company rate fell to 28%, and benefits, superannuation and Working for Families were lifted about 2% to offset the GST rise.
Source: NZ Herald ↗New Zealand was an early mover on the 'Netflix tax', extending 15% GST to offshore digital ('remote') services like streaming and apps from 1 October 2016.
The rule forced foreign suppliers selling to NZ consumers to register and charge GST, and NZ later extended GST collection to low-value imported goods too.
Source: Wikipedia (Goods and Services Tax, New Zealand) ↗
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Singapore
Introduced 1994 (1 April 1994, at 3%). On the recommendation of the 1986 Economic Committee, Singapore decided it needed to shift from direct to indirect taxes to stay competitive for investment and prepare for an ageing population. GST was implemented at a single rate of 3% on 1 April 1994 — among the lowest consumption-tax rates in the world at the time — with an assurance it would not be raised for at least five years. The introduction came alongside cuts to income tax (corporate and top personal rates, both 40% prior to 1986, were progressively reduced, with a further 3-point cut simultaneous with GST in 1994 to 27% and 30% respectively).
Singapore launched GST at just 3% in 1994 — with an assurance it would not be raised for at least five years — as a gradual introduction rather than a revenue grab.
The 3% rate was among the lowest consumption-tax rates in the world; it later rose to 4% (2003), 5% (2004), 7% (2007), 8% (2023) and 9% (2024).
Source: Goods and Services Tax (Singapore) — Wikipedia ↗When GST arrived on 1 April 1994, Singapore simultaneously cut its corporate and top personal income tax rates by 3 percentage points (to 27% and 30%) — part of a deliberate shift from direct to indirect taxation, not an extra tax piled on top.
Both rates had stood at 40% prior to 1986; the move was made on the 1986 Economic Committee's recommendation that Singapore shift from direct to indirect taxes.
Source: Goods and Services Tax (Singapore) — Wikipedia ↗Every Singapore GST hike has come bundled with an offset package that hands lower-income households more than the increase costs them: when the rate rose from 5% to 7% in 2007, the poorest 20% paid about S$370 a year more but received a S$910 offset plus S$1,000 in permanent annual benefits.
The offsets keep growing: the 'Assurance Package' tied to the 2023–24 hikes was enhanced to over S$10 billion by September 2023.
Source: Goods and Services Tax (Singapore) — Wikipedia ↗Gold, silver and platinum bullion are completely GST-exempt in Singapore — the government treats investment-grade precious metals like financial assets rather than goods.
The exemption took effect on 1 October 2012 to grow Singapore into a bullion-trading hub; metals must meet purity standards (gold 99.5%, silver 99.9%, platinum 99%) and be in tradable bar/coin/ingot/wafer form.
Source: Singapore Customs — GST Exemption for Investment Precious Metals ↗Singapore set up a standing 'Committee Against GST Profiteering' in 1994 to investigate businesses using the tax as cover to jack up prices.
The committee investigates complaints of unjustified price increases blamed on GST and was reactivated for later rate changes.
Source: Goods and Services Tax (Singapore) — Wikipedia ↗
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India
Introduced 2017 (1 July 2017). GST required amending the Constitution itself: the 101st Amendment Act, 2016 (President's assent 8 Sept 2016) conferred a simultaneous power on Parliament and the State Legislatures to tax goods and services and created a GST Council to set rates jointly. It launched at the stroke of midnight on 30 June/1 July 2017 in a special session of Parliament's Central Hall, where President Pranab Mukherjee and PM Modi pressed a button to switch it on, an event evoking India's 1947 independence midnight session and boycotted by several opposition parties (Congress, Trinamool, DMK, the Left).
India switched on GST at the stroke of midnight in a special session of Parliament's Central Hall, evoking India's 1947 independence midnight session, with the President and PM literally pressing a button to launch it on a digital screen.
A minute after midnight on 1 July 2017, President Pranab Mukherjee and PM Modi pressed a button to launch GST in the Central Hall; Modi invoked an Einstein remark on the difficulty of understanding (income) tax, while Congress, Trinamool, the DMK and the Left boycotted the event, calling it a self-promoting 'tamasha' that insulted the freedom struggle.
Source: India TV News ↗The World Bank ranked India's 28% top GST slab as the second-highest such rate among a sample of 115 countries, and India was one of only five nations (with Italy, Luxembourg, Pakistan and Ghana) using four or more separate GST/VAT rates.
The March 2018 World Bank India Development Update called India's GST one of the most complex in the world, citing multiple rates, a high peak rate and many exemptions.
Source: Business Today ↗India's monthly GST haul hit a record 2.37 lakh crore rupees (about US$28 billion) in April 2025, the biggest single-month collection since the tax began in 2017.
The gross figure was up 12.6% over April 2024, driven by year-end filings and strong domestic and import activity.
Source: Business Today ↗GST couldn't be passed as an ordinary law; it required amending the Indian Constitution to create a brand-new shared taxing power and a GST Council where the Centre and all the states decide rates together.
The Constitution (101st Amendment) Act, 2016 conferred simultaneous GST powers on Parliament and the state legislatures and set up the GST Council, subsuming roughly 17 central and state levies into one tax.
Source: CBIC, Government of India (cbic-gst.gov.in) ↗On top of the old 28% maximum, India layered an extra 'compensation cess' on sin and luxury goods; in the September 2025 'GST 2.0' overhaul the four-slab structure was simplified to mainly 5% and 18%, the cess was largely scrapped, and a single new 40% slab was created for sin and luxury goods.
The GST Council announced the changes on 3 September 2025, effective 22 September 2025: the 12% and 28% slabs were abolished, the compensation cess discontinued (except on tobacco/pan masala products), and 40% applied to items like tobacco, aerated drinks, high-end cars, yachts and private aircraft.
Source: Press Information Bureau, Government of India ↗
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United Kingdom
Introduced 1973. VAT came to Britain as the entry ticket to the European Economic Community: a value-added tax was a requirement of joining, so Edward Heath's government scrapped Purchase Tax and the Selective Employment Tax and launched VAT on 1 April 1973 at a single 10% rate (introduced by the Finance Act 1972, with Chancellor Anthony Barber setting the rate), leaving most food, fuel and housing zero-rated.
The UK adopted VAT largely because a value-added tax was a requirement of joining the European Economic Community in 1973.
With Edward Heath's government set on EEC entry, VAT (legislated by the Finance Act 1972) replaced Purchase Tax and the Selective Employment Tax on 1 April 1973 at a single 10% rate set by Chancellor Anthony Barber - then the lowest standard VAT rate in Europe.
Source: ICAEW - A brief history of VAT in Europe and the UK ↗In a 1991 tribunal, McVitie's defended Jaffa Cakes as cakes (not chocolate biscuits) by baking a giant 12-inch Jaffa Cake and arguing that cakes go hard when stale while biscuits go soft.
VAT is charged on chocolate-covered biscuits but cakes of any kind are zero-rated; the tribunal ruled Jaffa Cakes had 'sufficient characteristics of cakes' and kept them tax-free, making it Britain's most famous tax-classification case.
Source: Wikipedia - Jaffa Cakes ↗HMRC treats a gingerbread man with chocolate eyes as tax-free, but add chocolate trousers or buttons and it becomes 20% more expensive.
HMRC's official VAT Food manual lists 'gingerbread men with chocolate eyes' among items not considered wholly or partly chocolate-covered (so zero-rated); a biscuit figure with further chocolate decoration is partly covered and becomes standard-rated confectionery.
Source: GOV.UK - HMRC VAT Food manual VFOOD6240 ↗Marks & Spencer fought a roughly 13-year legal battle, all the way to the European Court of Justice, to win back £3.5 million of VAT it had wrongly paid on chocolate teacakes since 1973.
HM Customs & Excise admitted by letter on 30 September 1994 that the teacakes were zero-rated cakes, not biscuits, but resisted a full refund on 'unjust enrichment' grounds; the ECJ finally ruled in M&S's favour in 2008 on grounds of equal treatment / fiscal neutrality.
Source: Accountancy Age - M&S feasts on £3.5m teacake windfall ↗The 1991 VAT hike from 15% to 17.5% was made mainly to help pay down Margaret Thatcher's unpopular 'poll tax'.
Chancellor Norman Lamont raised the rate, with the extra revenue used to fund a reduction in the deeply unpopular community charge; the 17.5% rate then held for 17 years, until 2008.
Source: Wikipedia - Value-added tax in the United Kingdom ↗
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Canada
Introduced 1991 (GST took effect January 1, 1991). Prime Minister Brian Mulroney and finance minister Michael Wilson brought in the 7% GST in 1991 to replace the hidden 13.5% Manufacturers' Sales Tax, which Mulroney argued was hobbling Canadian exporters. The tax was so unpopular that when the Liberal-controlled Senate tried to block it, Mulroney invoked Section 26 of the Constitution Act, 1867 to have the Queen appoint eight extra senators and force the bill through in September 1990 — the only time that deadlock clause has ever been used.
To pass the GST, Mulroney used a 'deadlock' clause to pack the Senate with eight extra senators appointed by the Queen — the only time in Canadian history Section 26 of the Constitution has ever been used.
In September 1990 the Liberal-dominated Senate was blocking the tax, so Mulroney invoked Section 26 of the Constitution Act, 1867 to temporarily expand the Senate by eight seats, giving his Progressive Conservatives their first Senate majority in nearly 50 years. The provision had been available since Confederation but Mulroney was the first PM to use it.
Source: Library of Parliament — The Senate: appointments under Section 26 of the Constitution Act, 1867 ↗In Canada the same doughnut can be taxed or tax-free depending only on how many you buy: fewer than six is taxable, six or more is zero-rated.
CRA's Basic Groceries memorandum treats cakes, muffins, pies, pastries, doughnuts, cookies and similar single-serving sweetened baked goods as taxable when sold in quantities of fewer than six, but as zero-rated basic groceries at six or more — even a mix of six different items (e.g. two bagels, two muffins, two doughnuts) counts as six and is zero-rated.
Source: Canada Revenue Agency — Basic Groceries (GST/HST Memorandum 4-3) ↗British Columbians literally voted their consumption tax out of existence — a 2011 referendum scrapped the year-old HST, sending the province back to separate PST + GST.
After Bill Vander Zalm gathered more than 700,000 signatures, 54.73% of voters chose in the August 2011 referendum to 'extinguish' BC's HST (adopted July 1, 2010), forcing the province back to PST (7%) plus GST (5%) on April 1, 2013.
Source: CBC News — B.C. votes 55% to scrap HST ↗Canada's GST is one of the rare national VATs that has gone DOWN, not up — cut from 7% to 6% in 2006 and to 5% in 2008.
The Harper government reduced the federal GST by a point on July 1, 2006 and another point effective January 1, 2008, where it has stayed since.
Source: Wikipedia — Goods and services tax (Canada) ↗Canada charged GST on tampons for 24 years before scrapping the 'tampon tax' in 2015 after a decade-long campaign.
NDP MP Judy Wasylycia-Leis first tried to zero-rate menstrual products in 2004; Ottawa finally removed GST/HST on tampons, pads and menstrual cups effective July 1, 2015, at an estimated cost of about $36 million a year.
Source: CBC News — Federal government lifts GST on feminine hygiene products as of July 1 ↗
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United States
Introduced 1932 (first state general sales tax; no federal VAT/GST exists). The United States is the only major developed economy with no federal VAT or national sales tax; consumption is taxed instead by thousands of overlapping state and local sales-tax jurisdictions. The model was born in 1932 when Mississippi, facing a roughly $13 million Depression deficit, enacted the first statewide general sales tax (2%). The US House nearly passed a federal manufacturers' sales tax that same year, but a rank-and-file revolt — the "Sales Tax Rebellion" of 1932 — killed it, steering the country permanently toward state-level sales taxes.
The US is the only OECD economy without a national VAT or GST — consumption is taxed entirely by state and local sales taxes across thousands of separate jurisdictions.
Congress repeatedly debated a national sales tax (and later a VAT) but never adopted one, leaving general consumption taxation to the states from the 1930s onward.
Source: OECD Consumption Tax Trends — United States ↗In 1932 the US House nearly passed a federal sales tax, but a rank-and-file 'Sales Tax Rebellion' killed it — Congress instead enacted a slew of excise taxes on luxuries like furs, jewelry, yachts and safety deposit boxes.
With Depression revenues collapsing, Democratic leaders backed a manufacturers' sales tax that was defeated by a backbench revolt; lawmakers fell back on narrow excise levies plus higher income and estate rates, permanently steering the US away from a national consumption tax.
Source: Tax History Project / Tax Notes — The Republican Roots of New Deal Tax Policy ↗Mississippi launched America's first statewide general sales tax in 1932 at 2% — Governor Mike Conner actually wanted 3 cents on the dollar but the legislature cut him to 2.
Conner pushed an Emergency Revenue Act to ease a roughly $13 million Depression deficit; the 2% tax took effect May 1, 1932, and has since grown to Mississippi's 7% rate.
Source: Magnolia Tribune ↗Whether a candy bar is taxable can hinge on whether it contains flour: in many states a Twix or Kit Kat is tax-free 'food' while a Snickers or Milky Way is taxable 'candy.'
The Streamlined Sales Tax definition (adopted by ~24 states in 2002) excludes anything listing flour as an ingredient from 'candy,' so wafer/cookie bars like Twix and Kit Kat escape candy tax while pure chocolate-and-nut bars like Snickers don't.
Source: PBS NewsHour ↗
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Germany
Introduced 1968 (modern VAT); a general turnover tax existed from 1918. Germany first introduced a general turnover tax (Umsatzsteuer) in 1918 to help cover the costs of World War I, starting at just 0.5%. On 1 January 1968, following the European Economic Community's push for a harmonized VAT, Germany replaced its cascading gross turnover tax with a modern net all-phase VAT with input-tax deduction (Mehrwertsteuer), launching at a 10% standard rate with a reduced rate set at half that (5%). The standard rate reached today's 19% in 2007. Source: German Federal Ministry of Finance (BMF), "100 Jahre Umsatzsteuer."
Germany taxed tampons and sanitary products at the full 19% rate while items like caviar, truffles and cut flowers enjoyed the reduced 7% rate.
The gap stood until a 2019 Bundestag vote cut sanitary products to 7%, effective 1 January 2020. Cut flowers, truffles and caviar all sit in the reduced-rate Annex 2 (Anlage 2) to the German VAT Act.
Source: iamexpat.de ↗To protest the tampon tax, German startup The Female Company sold "The Tampon Book" — tampons hidden inside a book — exploiting the 7% rate on books, and the first print run sold out in a day.
Books qualified for the reduced 7% rate while menstrual products were taxed at 19%; the first print run sold out in a day and the second within a week. The stunt helped pressure the 2019 reform.
Source: iamexpat.de ↗A cappuccino made with cow's milk is taxed at 7% in Germany, but the identical drink made with oat or soy milk is taxed at 19%.
German VAT gives the reduced rate to drinks that are at least ~75% animal milk (e.g. a cappuccino at 75-80% milk). Plant 'milks' aren't legally milk under EU rules protecting the term, so they fall to the 19% standard rate.
Source: eClear ↗The European Court of Justice ruled in 2011 that Germany broke EU law by giving racehorses and saddle horses the same reduced VAT rate as farm animals destined for the dinner plate.
In Case C-453/09 (decided 12 May 2011) the Court held the reduced rate applies only to live animals 'normally intended' for food or feed, forcing Germany to charge full VAT on sport and leisure horses.
Source: VATupdate ↗Germany's very first general turnover tax in 1918 was a wartime levy of just 0.5% — the standard rate has since climbed to 19%.
Introduced amid World War I, the rate reached 4% by 1951 before the 1968 switch to modern VAT at 10%, reaching today's 19% in 2007.
Source: German Federal Ministry of Finance (BMF) ↗
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France
Introduced 1954. France invented the modern VAT: tax official Maurice Laure, who had trained as an engineer (Ecole Polytechnique, 1936) before helping create and joining the Direction generale des impots, designed the "taxe sur la valeur ajoutee" (TVA) to end the unpopular cascade taxes. The law enacting it was proclaimed on 10 April 1954 under President Rene Coty. Its trick was making businesses at every stage self-assess and remit tax only on the value they added.
VAT itself was invented in France in 1954 by a single tax official, Maurice Laure, who trained as an engineer at the Ecole Polytechnique before becoming a tax inspector.
Laure designed the taxe sur la valeur ajoutee to replace the inefficient cascade taxes; the model has since spread to more than 150 countries, with the United States the only major (OECD) holdout.
Source: Connexion France ↗France once charged a luxury VAT of roughly 33% (the 'taux majore') on cars, perfume, jewellery, furs, cameras and caviar.
This higher rate ran at 33% from 1970 to 1982, was later cut to 28% (1988) then 22% (1990), and was abolished entirely in 1992; today luxury goods just pay the standard 20% rate.
Source: Wikipedia (FR) - Taxe sur la valeur ajoutee en France ↗In 2024 France's highest court ruled that fresh supermarket sushi is taxed at 10%, not the 5.5% food rate, because it counts as food 'for immediate consumption.'
In the 'Sushi Saint-Cloud' decision (Conseil d'Etat, 18 June 2024, no. 476093) the court held that sushi is by its very nature meant to be eaten now, so packaging or place of purchase make no difference to the rate; the tax administration adopted this from 1 October 2024.
Source: BOFiP (French tax administration) - jurisprudence sushis frais ↗France has a 'super-reduced' VAT rate of just 2.1% - one of the lowest legal rates in the EU.
It applies to medicines reimbursable by social security, the daily and periodical press (explicitly excluding pornographic publications), the TV licence fee, and the first 140 performances of a newly created theatrical or musical work.
Source: Wikipedia (FR) - Taxe sur la valeur ajoutee en France ↗The same tub of caviar or margarine can be taxed at 10% or 20% depending only on whether you might eat it on the spot.
Caviar, margarine and vegetable fats are taxed at the full 20% rate when sold in packaging that lets you keep them, but drop to the 10% intermediate rate when sold for immediate consumption (e.g. in catering).
Source: Service-Public Entreprendre - VAT rates on food and beverages ↗
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Italy
Introduced 1973 (1 January 1973; legislated by Presidential Decree DPR n. 633 of 26 October 1972). Italy adopted IVA effective 1 January 1973 to replace its old cascading IGE turnover tax and align with the European Economic Community's harmonised VAT system (EEC directives 67/227 and 67/228), itself modelled on the French TVA pioneered by Maurice Lauré in 1954. The standard rate launched at 12%.
Until 2017, Italian truffle hunters could legally sell their finds anonymously with no receipt, and truffles were taxed at the full 22% VAT rate.
After the EU forced Italy's hand via 'EU Pilot 8123/15/TAXU', Law n.122 of 7 July 2016 (Art. 29) cut truffle VAT from 22% to 10% from 1 Jan 2017 and abolished the anonymous 'amateur collector', now requiring hunters to issue a receipt stating quantity, species and harvesting area.
Source: Villa Magna Tartufi - Truffle Tax Revolution ↗Italy was the first EU country to make B2B and B2C electronic invoicing fully mandatory, routing every single domestic invoice through a government platform.
From 1 January 2019 all domestic invoices must pass through the Agenzia delle Entrate's 'Sistema di Interscambio' (SdI) in FatturaPA XML format, giving the tax authority near-real-time visibility of commercial transactions to fight VAT fraud.
Source: Sovos - E-invoicing Italy ↗Italy's 'tampon tax' has bounced between four different VAT rates in three years - and was actually raised back up after a brief cut.
VAT on sanitary products went 22% -> 10% (Draghi, 2022) -> 5% (Meloni, 2023) -> back to 10% from January 2024, undoing the headline-grabbing 5% cut after barely a year.
Source: The Local Italy - Tampon tax: Italy to raise VAT on sanitary products ↗Italy has long had one of the largest VAT gaps in the EU - the tax legally owed but never collected hit roughly EUR 35 billion in 2018.
Italy's VAT gap was about EUR 35.4 billion in 2018, the largest in the EU in nominal terms. Aggressive digitisation (mandatory e-invoicing via SdI from 2019) helped narrow it, but per the European Commission's 2023 country report the gap was still around EUR 25 billion - 15.0% of total VAT liability - keeping Italy among the EU's worst.
Source: European Commission - Italy VAT gap country report 2023 ↗Everyday staples like bread, milk, fruit and vegetables carry a super-reduced 4% VAT in Italy - but the very same food becomes more expensive the moment it is served in a restaurant.
The 4% super-reduced rate (one of the lowest in the EU, also covering books, e-books and newspapers) explicitly excludes food consumed in restaurants, where the 10% reduced rate applies instead.
Source: eClear - VAT in Italy ↗
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Spain
Introduced 1986. Spain introduced IVA on 1 January 1986, the same day it joined the European Economic Community — adopting a harmonised VAT was a condition of EEC membership. It replaced the IGTE cascade tax, whose compounding levy at every production stage favoured vertical concentration, pushing firms to merge to reduce the number of taxed stages.
Spain's VAT didn't just coincide with joining Europe — it was effectively the entry fee, switched on the literal first day of EEC membership, 1 January 1986.
Adopting the common European VAT was a precondition of accession; IVA launched with a 12% standard rate, far below today's 21%.
Source: Economipedia ↗The tax IVA replaced — the IGTE — was so badly designed it effectively pushed companies to merge: the more separate firms a product passed through, the more 'cascade' tax piled up.
The IGTE (1964) taxed the full value at every stage, so vertical integration became a tax-avoidance strategy that distorted the economy; Economipedia notes it 'favoured vertical concentration and caused distortions.'
Source: Economipedia ↗In 2012 Spain nearly tripled the VAT on cinema, theatre and concerts from 8% to 21% — drawing strong criticism from the culture industry.
The hike landed just as the national cinematography fund was cut 14% to €33m; cinema admissions, already over 30% below their 2001 peak (98.3m in 2011), kept falling, and the cultural rate was only rolled back to 10% for live performance in 2017 and cinema in 2018.
Source: The Hollywood Reporter ↗During the 2022-24 inflation crisis Spain cut VAT on staple foods — bread, milk, cheese, eggs, fruit and vegetables — all the way to 0%.
The Sánchez government's anti-inflation package zero-rated basic foods (normally taxed at the 4% super-reduced rate) from 1 January 2023, with extensions running through 2024 before phasing back up.
Source: Sovos ↗Olive oil — a Spanish national symbol — was politically sensitive enough that the government zero-rated its VAT in July 2024, then permanently moved it into the 4% 'basic necessity' bracket in 2025.
Agriculture minister Luis Planas called olive oil 'an emblem of Spain's agri-food heritage'; extra-virgin oil went 0% (Jul-Sep 2024), 2% (Oct-Dec 2024), then a permanent 4% from January 2025.
Source: La Moncloa (Government of Spain) ↗
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Netherlands
Introduced 1969. The Netherlands switched to value-added tax on 1 January 1969 under the Wet op de omzetbelasting 1968 (enacted 28 June 1968), implementing the European Community's First and Second VAT Directives, which were themselves modeled on the French TVA invented by Maurice Lauré. It replaced the old cumulative cascade turnover tax (cumulatief cascadestelsel), which taxed the full value at every stage and so penalized longer supply chains.
When Dutch VAT launched in 1969, the standard rate was just 12% and the reduced rate 4% - both have climbed almost relentlessly to today's 21% and 9%.
The standard rate ratcheted up through 14% (1971), 16% (1973), 18% (1976), 19% (1984), 17.5% (1992), back to 19% (2001) and finally 21% (2012); the reduced rate went 4% to 5% (1984) to 6% (1986) to 9% (2019).
Source: Taxcel - BTW tarief historie ↗The EU dragged the Netherlands to the Court of Justice for charging the cheap VAT rate on horses - and in 2011 the court ruled a horse headed for slaughter is not 'similar' to a racehorse or a pet.
In Case C-41/09 (judgment 3 March 2011) the Court found the Netherlands breached the EU VAT Directive (2006/112) by applying the reduced rate to ALL horses, when the cut rate was only permissible for horses supplied for slaughter to be used in preparing foodstuffs.
Source: EUR-Lex - Case C-41/09 Commission v Netherlands ↗Cut flowers, pot plants and flower bulbs have enjoyed the Netherlands' reduced VAT rate since 1975 - originally justified as a way to help low-income households buy bouquets and create floriculture jobs.
A 2023 evaluation found the break ineffective (it doesn't actually reach poorer groups and the cost-per-job is high), so in March 2026 the Ministry of Finance opened a consultation to scrap the 9% rate for floriculture.
Source: Tax Expenditures Lab ↗The Dutch VAT that exists today only came about because Brussels wanted a common European tax - the system was effectively imposed by EU directives, not home-grown.
The Wet op de omzetbelasting 1968 implemented the European Community's First and Second VAT Directives, replacing the older cumulative cascade turnover tax with a credit-invoice VAT modeled on the French TVA.
Source: Wikipedia (NL) - Wet op de omzetbelasting 1968 ↗The Netherlands' standard VAT jumped from 19% to 21% overnight on 1 October 2012, a mid-fiscal-year austerity hike during the eurozone crisis.
The 2-point rise was part of a budget-deficit-cutting package aimed at keeping the deficit within 3% of GDP; the rate has stayed at 21% ever since, making it one of the higher standard VAT rates in the EU.
Source: Avalara - Netherlands raises VAT from 19% to 21% October 2012 ↗
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Ireland
Introduced 1972. Ireland introduced VAT on 1 November 1972, two months before joining the European Economic Community on 1 January 1973 — accession was conditional on adopting a harmonised VAT system. It replaced the existing Turnover Tax and Wholesale Tax with a single value-added tax, set at an oddly precise 16.37% standard rate (the awkward figure arose because VAT applies to the pre-tax price, so nominal rates had to be higher to raise the same revenue as the old taxes).
When a Subway franchisee tried to claim its sandwich rolls were zero-VAT 'bread', Ireland's Supreme Court ruled the rolls are legally not bread at all.
In Bookfinders Ltd v The Revenue Commissioners [2020] IESC 60 (29 September 2020), the court applied the statutory definition that capped sugar (with fat and bread improver) at 2% of the weight of the flour in the dough; Subway's dough had about 10% sugar, so the rolls fell outside the definition of 'bread' and could not be zero-rated.
Source: BAILII – Bookfinders Ltd v Revenue Commissioners [2020] IESC 60 ↗Ireland's standard VAT rate once reached as high as 35%.
Revenue's historical-rates record shows the standard rate peaked at 35% from 1 March 1983 until 1 May 1987 (during the early-1980s fiscal crisis) before falling back, eventually settling at 23%, where it remains today.
Source: Revenue Commissioners – Historical VAT rates ↗Ireland's very first VAT standard rate in 1972 was a bizarrely precise 16.37%, not a round number.
VAT launched on 1 November 1972 at a 16.37% standard rate as Ireland prepared to join the EEC, replacing the older Turnover Tax and Wholesale Tax. The odd figure came from applying the new tax to the pre-tax price so it raised the same revenue as the taxes it replaced.
Source: Revenue Commissioners – Historical VAT rates ↗An adult with small feet can be charged 23% VAT on the same shoes a child gets tax-free.
Children's personal footwear is zero-rated only up to roughly the average foot size for children under 11 (about size 5½ / continental 38). Footwear above that size, or adult footwear of any size, is taxed at the standard 23% rate — so an adult with small feet pays VAT on shoes a child would get tax-free.
Source: Revenue Commissioners – VAT and Footwear (Tax and Duty Manual) ↗Whether your medicine is VAT-free in Ireland can depend on which end of you it goes in.
Medicine for human oral consumption is zero-rated, while many non-oral medicines and medical products are charged at the standard 23% rate (with limited exceptions such as certain hormone and nicotine replacement therapies).
Source: Revenue Commissioners – VAT treatment of Human Medicines (Tax and Duty Manual) ↗
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UAE
Introduced 1 January 2018. VAT was introduced under Federal Decree-Law No. 8 of 2017 at a flat 5%, implementing the 2016 GCC-wide Unified VAT Agreement signed by all six Gulf states to diversify government revenue away from oil after the price crash. The UAE and Saudi Arabia were the first two GCC members to switch it on, both on the same day: 1 January 2018.
VAT was the UAE's first-ever broad federal tax — a country famous for charging residents no income tax began taxing nearly everything they buy on a single day, 1 January 2018.
Introduced under Federal Decree-Law No. 8 of 2017 to diversify revenue away from oil; the UAE still levies no personal income tax on residents.
Source: UAE Ministry of Finance ↗At 5%, the UAE has one of the lowest standard VAT rates on Earth — undercut only by a handful of places like Andorra's 4.5%, and a fraction of Hungary's world-topping 27%.
Most national standard VAT rates sit between 15% and 27%; EU law forbids members from going below 15%.
Source: VATupdate – Global VAT Rates by Country 2026 ↗The 5% rate was never a UAE decision alone — it was locked in by a treaty: the 2016 GCC Unified VAT Agreement that bound all six Gulf states to a common framework, with the UAE and Saudi Arabia flipping the switch together on 1 January 2018.
Saudi Arabia later broke ranks and tripled its rate to 15% in July 2020 to plug a COVID-era deficit; the UAE kept its 5%.
Source: ZATCA (Saudi tax authority) – GCC Unified VAT Agreement ↗Certain UAE free zones are legally treated as being 'outside the State' for VAT — so a warehouse a few kilometres from Dubai's centre can sit in tax-no-man's-land for goods, yet still be 'inside' the UAE the moment you sell a service there.
These 'Designated Zones' (about 23 of them) must be fenced with customs and security controls; goods within them are outside VAT scope but services are taxed at 5%.
Source: UAE Federal Tax Authority – Designated Zones VAT Guide ↗Gold creates a VAT split personality: investment-grade bars and coins of 99%+ purity are zero-rated, but the gold necklace next to them is taxed at the full 5% — including the jeweller's making charges.
Since Feb 2025 (Cabinet Decision 127 of 2024, effective 15 February 2025) a reverse-charge mechanism means VAT-registered businesses trading precious metals and stones don't charge each other VAT at the till; the buyer self-accounts in their return.
Source: ClearTax – VAT on Gold in UAE ↗
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Saudi Arabia
Introduced 2018 (1 January 2018). Saudi Arabia introduced VAT at 5% on 1 January 2018 under the 2016 GCC Common VAT Framework Agreement, a deliberate move to diversify revenue away from oil under Vision 2030; it and the UAE were the first two Gulf states to switch it on, both on the same day.
Saudi Arabia tripled its VAT rate from 5% to 15% on 1 July 2020 — one of the steepest single VAT jumps any major economy has made.
The hike was announced on 11 May 2020 to shore up state finances as COVID-19 and collapsing oil prices battered the budget; it took effect on 1 July 2020.
Source: Deloitte Middle East ↗Crown Prince Mohammed bin Salman publicly called the 15% VAT a 'painful measure' and promised it was temporary — targeted to fall back to 5–10% within one to five years.
In a televised Vision 2030 fifth-anniversary interview in late April 2021 he said it was 'painful for me personally,' that it would last 'a year, maximum five years,' and that the target was 'between 5 to 10 percent.' The rate has nonetheless stayed at 15% ever since.
Source: Arab News (full interview transcript) ↗Saudis lost a perk and gained a tax in the same breath: the same May 2020 package that tripled VAT also suspended the 1,000-riyal monthly cost-of-living allowance paid to state workers.
VAT rose from 1 July 2020 while the allowance was suspended from 1 June 2020, together part of roughly 100 billion riyals of austerity measures affecting about 1.5 million state employees.
Source: Gulf News ↗Just months after tripling VAT, Saudi Arabia pulled property sales out of the VAT system entirely — exempting real estate from the 15% VAT and replacing it with a separate 5% Real Estate Transaction Tax.
A Royal Decree of October 2020 created RETT; all real estate transactions after 4 October 2020 became VAT-exempt and subject instead to 5% RETT, cutting the tax on a home transfer from 15% to 5% to protect the property market.
Source: EY Global Tax Alert ↗Every B2C receipt in Saudi Arabia must now carry a cryptographically-stamped QR code, and businesses report the sale to a government platform called 'Fatoora' within 24 hours of issuing the invoice.
ZATCA's mandatory e-invoicing system (Phase 1 'Generation' from 4 December 2021, real-time Phase 2 'Integration' rolled out in waves from 1 January 2023) makes QR codes compulsory on simplified invoices so the VAT can be verified on the spot.
Source: ZATCA (Zakat, Tax and Customs Authority) roll-out phases ↗
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Japan
Introduced 1989 (3% rate from 1 April 1989; raised to 5% in April 1997, 8% in April 2014, 10% in October 2019). Japan took a full decade and three prime ministers to enact a broad consumption tax: Masayoshi Ohira's 1979 "general consumption tax" was abandoned after a bruising 1979 general election, Yasuhiro Nakasone's 1987 "sales tax" bill collapsed in May 1987 under public opposition, and Noboru Takeshita finally pushed the 3% tax through the Diet in December 1988, effective 1 April 1989.
It took three prime ministers and roughly a decade to pass: Ohira's 1979 tax was abandoned after a public backlash at the October 1979 general election, Nakasone's 'sales tax' bill collapsed in May 1987, and only Takeshita finally got the 3% tax through the Diet in December 1988.
Each earlier attempt was abandoned in the face of fierce public backlash before the tax finally took effect on 1 April 1989.
Source: Nippon.com — The Political History of Japan's Consumption Tax ↗The tax helped wreck the ruling party: months after the 3% tax launched, the LDP lost its Upper House majority for the first time in the July 1989 election, with tax anger compounding the Recruit bribery scandal that had already forced Takeshita to resign.
It was the first time the Liberal Democratic Party lost the popular vote in a national election since its 1955 founding (the vote was held 23 July 1989).
Source: Wikipedia — 1989 Japanese House of Councillors election ↗Whether your convenience-store bento is taxed 8% or 10% runs largely on the honor system: big chains won't ask, so you're supposed to volunteer that you'll eat at the in-store counter so the clerk charges the extra 2%.
Since the 2019 split rate, takeout food is 8% but eating in is a 'restaurant service' at 10%; instead of quizzing every customer, stores post signs asking shoppers to self-declare — and one investigation found eight or nine of ten customers pay the takeout rate yet use the eat-in space anyway.
Source: Unseen Japan — Why Japan's Combini Eat-In Rules are Confusing ↗Bottled water is taxed at 8% but tap water at 10% — because tap water 'can also be used in washing machines and toilets' and so isn't legally a foodstuff.
The same logic produces other oddities: mirin (sweet cooking sake) is 10% as alcohol, but a <1% alcohol 'mirin-style' seasoning gets the 8% food rate.
Source: Nippon.com — Japan's Consumption Tax Hike: Exceptions and Inclusions ↗A snack-with-a-toy boxed set qualifies for the cheaper 8% food rate only if the food is at least two-thirds of the product and the total price is no more than 10,000 yen — otherwise it's taxed at 10%.
This means a model kit bundled with a few candies tips over to 10%, but a snack with a small toy can stay at 8%.
Source: Nippon.com — Japan's Consumption Tax Hike: Exceptions and Inclusions ↗