North America comprises a diverse range of tax systems, from highly developed federal and state-level structures to jurisdictions with no indirect taxation at all.
United States:
The U.S. does not operate a federal VAT or GST. Instead, each state and some localities impose sales and use taxes independently, with economic nexus laws varying by jurisdiction. Businesses must register and file in each state where they meet nexus criteria, which typically involve sales or transaction thresholds. Sales tax applies primarily to tangible personal property, with rules for digital services and exemptions varying widely.
Canada:
Canada employs a multi-level tax system, including the federal Goods and Services Tax (GST) and Provincial Sales Taxes (PST/HST). Registration is required when a business exceeds CAD 30,000 in taxable supplies over four consecutive calendar quarters. Filing is typically quarterly or annually, depending on revenue.
Mexico:
Mexico uses a federal Value Added Tax (IVA) system with a standard rate of 16%. Businesses must register for IVA once they commence taxable activity, including digital services provided by foreign entities. Regular monthly VAT returns are required.
Caribbean Nations and Territories:
Many jurisdictions like Barbados, Bahamas, Belize, Dominican Republic, Saint Lucia, and Trinidad and Tobago have implemented VAT or GST systems, typically ranging from 10 18%. Registration thresholds and compliance requirements vary. Some smaller territories (e.g., Cayman Islands, Bermuda, Turks and Caicos Islands) do not levy VAT or GST, relying instead on customs duties and service-based levies.
Territories and Dependencies:
Jurisdictions such as Puerto Rico and U.S. Virgin Islands have unique tax regimes. For example, Puerto Rico operates a Sales and Use Tax (SUT), while the U.S. Virgin Islands imposes a Gross Receipts Tax.
Digital Services:
There is growing adoption of taxation on digital and electronic services, especially by foreign providers. Countries like Mexico, Barbados, and Dominican Republic have introduced rules requiring non-resident digital service providers to register, collect, and remit tax.
Exemptions & Thresholds:
Thresholds for VAT/GST registration vary widely across countries, ranging from zero in some jurisdictions to significant amounts in others. Common exemptions include essential goods (like food and medicine), education, health services, and financial transactions.
Filing & Compliance:
Most countries require monthly or quarterly filings for indirect taxes, with strict penalties for non-compliance. Foreign businesses may be required to appoint a fiscal representative in some jurisdictions.
