Value-added Taxes (VAT) / Goods and Services Tax (GST)

The Value Added Tax (VAT) or Goods and Services Tax (GST) are broadly based consumption tax assessed on the value added to goods and services. It applies to all goods and services that are bought and sold for use or consumption in foreign tax jurisdiction. Thus, goods which are sold for export or services which are sold to customers abroad are normally not subject to VAT. When buying or selling items from outside the United States, additional taxes might be applied to the sale or purchase.

Purchasing

Purchasing tangible personal property from outside the United States, might lead to added taxes to the item. Like Sales Tax is added by some States on sales within the US, Value Added Tax (VAT) or Goods and Services Tax (GST), are non-U.S. consumption taxes imposed on sales of goods by businesses (For both the for-profit business as well for the not-for-profit businesses). Right now, more than 160 countries around the world use value-added taxation, and it is most found in the European Union.

In general, Harvard University purchasers should not have to pay VAT for goods or services to be used in the US, but if a vendor charges VAT for goods or services to be used in the US, the Harvard University purchaser should request that the VAT be removed. If the request is not successful, Harvard University should pay the VAT as part of the purchase.  (Harvard University does not have a VAT number.)

Besides the added tax on tangible personal properties, countries across the world are rapidly extending VAT and GST to the sale of electronic / digital services by online providers and platforms to consumers. The definition of e-services varies between jurisdictions, but typically includes income for the sale of streaming media and games; e-books; software; apps; web hosting and other cloud services; subscriptions to membership websites; online newspapers and journals; and online gambling services.

Providing Services

If your department is selling goods and services in a foreign country, you may be required to collect and remit VAT. Please contact the Global Support Services Client Service team by clicking here.

If you are not sure if VAT/ GST applies to your purchase, please contact Yvan Maniraguha Kywala.

Digital Services Tax (DST)

Digital service taxes (DSTs) are a set of new direct and indirect taxes imposed on multinational firms based on their digital activities in a particular jurisdiction. It is important to distinguish DSTs from other more indirect taxes, such as value-added taxes (VATs), that include certain digital activity.

Several countries have asserted a new right to tax revenue they determine to derive from online economic activity, or the “digital economy,” within their borders. The University tax compliance team continues to monitor and analyze the different DST developments, OECD milestones, country specific details of certain enacted or proposed DST.

If you would like more information about DST in particular country or to review if DST applies to an online course or service Harvard University is providing, please contact Yvan Maniraguha Kywala.