What are the key consumption tax trends from the OECD 2024 report?

Rising VAT rates, expanded digital tax rules, and the adoption of e-invoicing are some of the main trends highlighted in the report.

Which countries increased VAT rates in 2024?

Turkey, Estonia, and Switzerland raised their VAT rates in 2024, reflecting an ongoing global trend among OECD Member States.

What is the average standard VAT rate among OECD countries in 2024?

The average standard VAT rate increased to 19.3% in 2024, up from 19.1% in 2023 and 19.2% in 2022.

How are OECD countries addressing online sales taxation?

Most OECD Member States implemented VAT rules for online services and digital product sales, adhering to OECD VAT standards.

What is the trend in e-invoicing among OECD countries?

E-invoicing is gaining traction, with 17 countries requiring systematic electronic reporting and 11 implementing near real-time reporting systems.

How does car taxation align with environmental goals in OECD countries?

Car taxation increasingly considers environmental factors like fuel efficiency and offers direct subsidies for purchasing electric vehicles.

OECD Report 2024: Key Global Trends in VAT, GST, and E-Invoicing

The purpose and aim of the Organisation for Economic Co-operation and Development (OECD), an intergovernmental organization, are to enable economic progress and positively impact world trade. To achieve this, the OECD, in cooperation with national governments and other organizations, defines policies and creates global standards.

Taxation is one of the OECD's many topics of interest, and one of its main tasks is providing tax data, analysis, and policy advice. Following this path, the OECD issued a Consumption Tax Trends 2024 report that provides insights into VAT, GST, and excise duty trends among the OECD Member States.

Main Consumption Tax Trends

VAT is the most widespread type of consumption tax, implemented in 175 countries worldwide. One of the first noticeable trends is that the average standard VAT rate among the OECD countries increased to 19.3% in 2024, slightly increasing from 19.1% in 2023 and 19.2% in 2022.

Turkey, Estonia, and Switzerland increased their standard VAT rates. Turkey raised its rate from 18% to 20% in 2023, whereas Estonia and Switzerland raised their rates from 20% to 22% and 7.7% to 8.1%, respectively, in 2024.

Germany and Ireland, two countries that temporarily reduced their standard VAT rates to address the economic crisis caused by the COVID-19 pandemic, have removed these reductions and returned to the pre-pandemic standard VAT rate.

Regarding the VAT rates, all OECD countries except Chile have applied reduced VAT rates to various goods and services.

OECD Member States with VAT regimes implemented VAT rules on online sales of services and digital products from non-resident e-commerce vendors and marketplaces following the OECD VAT standards and recommendations.

Invoicing and other reporting requirements are inevitable when discussing consumption taxes. The OECD stated that 17 of the 35 countries require systematic electronic transactional reporting to Tax Authorities, and 11 have a near real-time reporting system. E-invoices are now allowed in all OECD countries, but not all countries have mandatory e-invoicing rules.

Conclusion

Data provided by the OECD lay out some interesting consumption tax trends. Following the OECD report, it is clear that implementing mandatory e-invoicing rules is one of the growing trends.

Also, car taxation and direct subsidies on purchasing electric vehicles (EVs) are upcoming trends among OECD countries. Environmental considerations and fuel efficiency are among the parameters used to determine the levels of car taxation. It will be interesting to monitor the further development of global and national policies regarding consumption taxes.

Source: OECD Consumption Tax Trends 2024