VAT returns ensure that exports leave the country VAT free, just like exports from the US leave the country free of sales tax. It is entirely analogous. How do you mean this gives VAT countries an advantage?
You have a common argument
Because VAT was already collected during production, then VAT refunds remove that embedded tax cost. U.S. sales tax is only applied at final sale. There is no sales tax in production for EU
Even though VAT refunds seem analogous to US sales tax exemptions, the key difference is that VAT refunds remove tax burdens from exports in a way that US sales tax exemptions do not
Which you haven't shown.
You started with corporate tax rate but from my understanding those are pretty similar if being paid at all:
"• Over the past three years, Tesla has reported $10.8 billion in U.S. income but paid only $48 million in federal taxes, bringing its effective tax rate to 0.4 percent—far below the 21 percent corporate tax rate." https://www.nationofchange.org/2025/01/31/tesla-paid-zero-fe...
US is still disadvantaged despite subsidies for EV for like Tesla that were created to encourage clean energy. There is still a system wide US problem. This is despite Tesla receiving subsidies that are far below the 21% corporate tax rate. The tax is still there and then you have VAT that can’t be refunded because the US does not have a VAT system.
What are those taxes that you are talking about?
I’m sorry, I fail to see the difference. In one case the tax is added during production and then returned when the good is exported, and in the other case it is never added at all. In both cases you end up with zero net VAT/sales tax paid. Where exactly does the difference lie?
The key difference lies not in whether VAT or sales tax is applied to exports, but in how VAT-based economies structure taxation throughout production versus how the US does.
The imbalance exists not because VAT is unfair. It exists because the US system does not have a VAT that can be “discounted” and therefore US exporters end up paying more and baking the cost into their products. Consumer ends up paying more on the other EU end.
In VAT systems, businesses prepay taxes at every stage, then receive a full refund on export, removing embedded costs. I think I said that? There is no equivalent mechanism on the US side.
You seem to be saying that having a tax that is refunded gives a different result than not having the tax at all, which sounds like nonsense to me.