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US Sales Taxes Rise

Wednesday, March 10, 2010

According to the annual 2009 Sales Tax Rate Report by Vertex Inc., a provider of corporate tax advice, a record-breaking 7 states – in addition to one district – have increased their sales tax rate in 2009 and the average number of sales tax rate changes from 2008 to 2009 has increased by more than 30% compared to the average number of changes from 2000-2007.

According to Vertex Research, the new state increases and increased average of rate changes over the past two years is in direct response to state and local governments grappling with budget deficits of a magnitude that has not been experienced since the early 1940s.

“In the last several years, there has been a spike in the number of new city and special purpose business district sales taxes,” said John Minassian, Vice President Tax Content Development, Vertex. “We view this as a direct response to the economy which has caused a reduction in tax revenues from local to state levels.”

The 2009 report indicates:

  • The average sales tax rate in the US now stands at 5.468% – the highest average recorded rate since Vertex began tracking sales tax rate change data in 1982.
  • The driving force behind the increase in the average rate stems from seven states and one district increasing their sales tax rates:
    • California (increased its rate to 7.25% leading the way as the state with the highest state sales tax rate)
    • Delaware (rental tax increase)
    • Minnesota
    • Massachusetts
    • North Carolina (increased their rate twice in 2009 settling on 5.75%)
    • Utah
    • Nevada
    • District of Columbia
  • The average county sales tax rate in the US held steady at 1.629%, and the average city rate declined slightly to 1.532%.
    • Catawba Indian Reservation, Lancaster County, South Carolina has claimed the top position as the highest city sales tax rate at 8% topping the 2008 rate found in Wrangell, Alaska (7%).
  • The combined average sales tax rate has risen to 8.629% up from 8.574% in 2008. The highest combined rate (12%) belongs to Arab, Cullman County, Alabama.

Since 2000, there have been 2,631 new sales and use taxes levied – an average of 263 per year - according to the report. Meanwhile, 5,242 changes were made to sales and use tax rates, averaging 524 per year. The combined total of new and changed sales and use tax rates for the period is 7,873, or an average of 787 per year.

According to Vertex President and CEO Jeff Westphal, the pace at which tax changes are instituted and the complexity of tracking these changes presents a dynamic challenge to corporate tax and finance departments.

“The fluctuation of tax changes over the past decade – nearly 800 per year – means that organizations can no longer ignore the current state of their tax practices,” commented Westphal. “The changes reported in state, county, and city sales tax rates in 2009 continue to increase pressure on companies and their tax departments as it becomes increasingly difficult to manually keep pace with changes that could have a direct impact on their compliance and a company’s bottom-line.”

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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