Over the last two decades, KPMG’s Global Indirect Tax Services practice has seen a significant increase in the number of countries and jurisdictions using indirect tax to fund government. According to the Organisation for Economic Cooperation and Development (OECD), Value Added Tax and Goods and Services Tax (VAT/GST) are now imposed in over 150 countries, including 33 out of 34 OECD member countries. The US is the lone exemption but even it has subnational indirect consumption taxes at average rates of approximately 8.6 percent. And while VAT/GST is a relatively new taxation method, they are clearly the way of the future. The OECD observes that consumption taxes now account for 31 percent of all revenue collected by governments of OECD member countries and 20 percent of taxation revenues worldwide. VAT/GST is now one of the most important sources of revenue for governments, second to social security contributions and personal income taxes, and well ahead of corporate income taxes, specific consumption taxes and property taxes as a source of revenue.
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