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GST – International Scenario

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GST – International Scenario:

GST was first introduced in France and now more than 150 countries have introduced GST. Most of the countries, depending on their own socio-economic formation, have introduced National level GST or Dual GST.

India has Dual GST.

We have discussed below key features of GST prevalent in some of the countries.

United Kingdom

Name: Value Added Tax

Date of introduction: 01.04.1973

Scope:

• Supply of goods or services made in the UK
• Intra-community procurements from EU members
• Importation of goods and services

Standard Rate: 20 %

Reduced Rate: 5 % and exempt and zero-rated

Threshold exemption limit: £ 73,000

Liability arises on:

1. Accrual Basis: On raising of invoice or receipt of consideration or supply (of goods or services), whichever is earlier.
2. Cash Basis: (if turnover is below £1.35 million): On receipt of consideration

Payment:  Usually quarterly returns. However, a small business can opt for annual returns filing.

Export: Exports are ‘Zero’ rated.

Exempt Services:

1. Medical and education
2. Finance, insurance, postal services

Innovative Concept: To ease the VAT administration, the assessee is informed at the time of registration itself as to which of the three quarterly cycle it should follow for filling the VAT returns.

#Source: http://www.hmrc.gov.uk

Canada

Name: Federal Goods and Service Tax & Harmonized Sales Tax

Date of introduction GST: 01.01.1991 & HST 01.04.1997

Scope: Taxable supplies of goods and services

Standard Rate: GST 5% and HST varies from 0% to 15%

Reduced Rates: Exempt and Zero-rated

Threshold exemption limit: Canadian $ 30,000

Liability arises on: On accrual (date of invoice, date of issue of invoice) or receipt of consideration, whichever is earlier.

VAT returns and payments: Depending on the turnover, tax needs to be deposited either monthly, quarterly or annually.

Reverse charge mechanism: Reverse charge applies to the importation of services and intangible properties.

Export: Exports are ‘Zero’ rated.

Exempt services:

1. Supply of real estate
2. Financial Services and residential renting
3. Supplies by charities
4. Health, education services

Innovative concept: A group concern can supply to another group concern at zero-rated.

#Source: http://cra-arc.gc.ca

Australia

Name: Goods and Service Tax

Date of introduction: 01.07.2000

Scope:

• Taxable supplies of goods and services made which are connected with Australia and made for a consideration     by a registered (or required to be registered) person in the course of business enterprises
• Importation of goods

Standard Rate: 10 %

Reduced Rate: 0 %

Threshold exemption limit: $ 75,000

Liability arises on:

• Accrual basis: On the raising of invoice or receipt of consideration, whichever is earlier.
• Cash basis: [an option available to assessee having turnover below $ 2 million]: On receipt of consideration.

Payment: Depending on the turnover, the tax needs to be deposited either monthly, quarterly or annually. The due date for payment Tax needs to be deposited on 21st day following the end of the month/quarter/year.

Reverse Charge Mechanism: Reverse charge applies to supplies made by non-residents

Export: Exports are ‘Zero’ rated.

Exempt Services:

1. Government supplies such as water services, drainage services etc.
2. Health, education, religious supplies Financial Services and residential renting
3. Vegetable, fruit, meat

Innovative Concept: ‘Group registration’ wherein a single consolidated return for the group can be filed.

#Source: www.ato.gov.au

Republic of China

Name: Value Added Tax
Date of introduction:8 01.01.1994
Scope:

• Taxable supplies of goods and services for consideration in China by a taxable person in the course or                  furtherance of a business
• Importation of goods

The scope of VAT in China is particularly on ‘goods’. At present, only two services (viz. Repair services & Service of supply of goods as per customers requirement) attract VAT.

Standard Rate: 17 %

Reduced Rates: 13%, 6%, 4%, 3 % and 0%

Liability arises on: On raising of invoice or receipt of consideration, whichever is earlier. However, in the case of payments in installments, the relevant date when the installment is due.

Payment: Depending on the turnover if it is monthly or quarterly then payment within 15 days from the end of the month or quarter.

The due date for VAT return: Within 15 days from the end of the month/ quarterly

Export: Exports are ‘zero’ rated.

Exempt Services:

1. Agricultural products and fertilizers
2. Contraceptives, Second-hand goods (by individuals)

Innovative concept: Small businesses can pay VAT @ 3% (however input tax credit would not
be available).

New Zealand

Name: Goods and Service Tax

Date of introduction: 01.10.1986

Scope:

• Supply of goods or services made in New Zealand by a registered person
• Importation of goods

Standard Rate: 15 %

Reduced Rate: Zero-rated and exempt

Threshold exemption limit: NZ$ 60,000

Liability arises on: On raising of invoice or receipt of consideration, whichever is earlier.

Returns: Depending on the turnover it is either monthly, bi-monthly or six-monthlyDue date for returns and payment On 28th day following the end of the month or bi-month or six-month.

The due date for returns and payment: On the 28th day following the end of the month or bi-month or six-month. However, a different date for the certain periods.

Reverse charge mechanism: Reverse charge applies to the supply of services made by non-residents.

Export: Exports are ‘zero’ rated.

Exempt services:

1. Real estate
2. Financial services
3. Residential rental

Innovative concept: The headline price in advertisement and stores must be always GST inclusive except when supplies are to wholesale clients.

#Source: rd.govt.nz

Singapore

Name: Goods and Service Tax
Date of introduction: 01.04.1994
Scope:

• Supplies of goods and services in Singapore by a taxable person in the course or furtherance of a business
• Importation of goods

Standard Rate: 7 %

Reduced Rate: Zero-rated and exempt

Threshold exemption limit: Singapore $ 1 million

Liability arises on: On raising of invoice or receipt of consideration or supply (of goods or services), whichever is earlier.

Returns: Usually quarterly returns. However, a business can opt for monthly returns.

The due date for returns and payment: Last day of the month following the end of the month or quarter.

Reverse charge mechanism: Reverse charge applies to the supply of services

Export: Exports are ‘zero’ rated.

Exempt services: Real estate, Financial services, Residential rental

Innovative concept: Divisional registration wherein if an assessee has several divisions he may register the said divisions separately. Each such division should submit its own return. The supplies between the divisions are ignored for GST purposes.

#Source: http://ras.gov.sg

European Union

Name: Value Added Tax
Territory: Of the 27 states the prominent states are: United Kingdom, France, Germany, Sweden, Spain, Italy, Ireland, Poland, Austria, Belgium, Denmark, Netherland, Portugal, Hungary.

EU is a ‘single market’ meaning the goods and services can move freely in cross border trade between member states.

Scope:

• Supplies to Taxable persons: VAT is payable by the taxable person on acquisition (i.e. purchaser) at the rate        applicable in his (acquirer’s) country
• Supplies to non-taxable persons: VAT is payable by a supplier (i.e. seller)

Standard Rate: Minimum 15 %

Reduced Rates: 5 % and 0 %

For threshold exemption limit, payment, etc: Please Refer specific country

That’s it for this post, my friend. I hope you again gained some insights from this post.

In the upcoming posts you will know about:

• GST Model & Registration
and
• The special one “GST – E-Commerce and Digital Business

I know this taxation part is so boring but very essential part of a business.

Please comment below about your doubts and questions about GST. Also, let me know what do you want to learn or expect from me?

Don’t lose your focus, stay connected and learn Entrepreneurship.

Thanks for your valuable time, talk to you more about GST in next post.

#flyhigh & #LiveYourPassion

Courtesy: A special thanks to our beloved CA Pritam Mahure for his guidance and efforts.