For businesses selling from India to the UK or the US, understanding consumption taxes is vital. While they might seem similar, Value Added Tax (VAT) and Sales Tax work very differently.
Input Credits vs. Exemptions
VAT is a multi-stage tax where you can reclaim the tax paid on your inputs. Sales Tax is typically a single-stage tax paid by the end consumer, with businesses using resale certificates to avoid paying it at each step.
Registration Thresholds
In the UK, distance selling thresholds are gone for non-resident sellers—you may need to register from your very first sale. In the US, the concept of 'Economic Nexus' means you must track your sales volume by state.