Consumption tax is the tax that you add when you invoice your clients. Other names for consumption tax are VAT or GST.
The term consumption tax refers to tax that you add to your invoices—such as value-added tax (VAT) and goods and services tax (GST).
The term GST is used in countries like Australia, India, New Zealand, while VAT is used in Indonesia, Ireland, the Philippines, and South Africa.
Do I have to add tax to my invoices?
If you’re registered for consumption tax, you have to add tax to your invoices. Whether you have to register, depends on how much you’re earning. The threshold varies from country to country.
There is an exception, and that’s if you sell goods and services that are exempt or excepted.
Read more about what to do about tax on your invoice.
Remember that once you’re registered for tax, you also have to report information about tax to the tax authorities: In other words how much tax you’ve claimed, and how much tax you’ve paid your suppliers. If you’ve claimed more than you’ve paid, you’ll have to pay the difference. If you’ve paid more than you’ve claimed, you’ll get a tax refund.
How much consumption tax do I add?
How much consumption tax you should add, depends on which country you’re operating in. You should check with the tax authorities to find out what applies to your business.
When you invoice with the free invoice software from Conta, you can easily turn on or off tax on your invoices. If tax is on, you’ll be asked which tax rate you want to add per product and service. Don’t worry, we’ll only show you the tax rates for your country, to make it easier to choose the right tax.
These are the GST and VAT rates worldwide.