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Report Charts Global Tax Rates On IT Goods And Services

by Mike Godfrey,, Washington

30 October 2014

The Information Technology and Innovation Foundation has released a new report that ranks 125 nations on the taxes and tariffs that they levy on IT goods, as part of the not-for-profit organization's efforts to lobby Governments for tax relief.

In its new Digital Drag report, the Foundation charts the tariffs and taxes on cell phones, computers, telecommunication services, and an array of additional ICT goods and services. The Foundation contends that nations should look to reduce the tax barriers they impose on trade in the industry's products, noting the productivity improvements that the industry's goods and services can unlock for both the developed and developing world.

According to the Foundation's report, of the 125 nations examined, 31 impose combined ICT tax and tariff rates of over five percent of product or service costs, with several countries adding more than 20 percent to costs. Another 40 countries impose taxes and tariffs of between one and five percent, it says, and 68 add tariffs of at least one percent.

Bangladesh is said to impose the highest taxes on the industry, averaging tax of 57.8 percent in addition to the country's 15 percent value-added tax (VAT) rate. In second and third place are Turkey and Congo, which add taxes and tariffs of 26.1 percent and 23.8 percent, respectively.

Greece is the only Organisation for Economic Cooperation and Development (OECD) country to feature in the top-20 countries, imposing a tax and tariff burden of 9.6 percent. Chile, the only other OECD country in the top-50, adds taxes of four percent.

One-half of the 50 countries with the highest tax burden are in Sub-Saharan Africa, and 11 are in the Latin America and Caribbean region.

The report concludes by noting evidence that shows that taxes have a noteworthy impact on the adoption of ICT goods and services, lowering demand by as much as 20 percent in Bangladesh, Brazil, and Congo, and also pushing up digital piracy rates. The report says that taxes are also having a major impact on economic productivity. In India, for instance, for every dollar raised from taxes, USD1.30 is lost as a result of lower productivity.

"A clear way for nations to enable faster economic growth is to spur the use of ICT by businesses and consumers. And many can do this with the stroke of a pen: eliminating discriminatory taxes and tariffs on ICT goods and services," the Foundation said.

TAGS: tax | business | Chile | India | export duty | tariffs | Bangladesh | Brazil | Greece | import duty | trade | Turkey | services | Africa

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