What Is a VAT ID in the USA for Businesses?

The United States does not operate under a Value Added Tax (VAT) system, and therefore does not issue an official “VAT ID.” A VAT ID is a unique identification number for businesses registered for VAT in countries that levy this consumption tax, used by tax authorities to track transactions and ensure compliance. While the U.S. lacks a federal VAT, it uses other tax identification numbers for similar purposes, especially in international trade.

The US Tax Identification System

The U.S. tax system relies on several identification numbers for businesses and individuals, serving as unique identifiers for tax and financial activities. The primary identifier for businesses is the Employer Identification Number (EIN). This nine-digit number is assigned by the Internal Revenue Service (IRS) to business entities for tax reporting. Most businesses, including corporations, partnerships, and multi-member limited liability companies (LLCs), need an EIN for tax filings, opening bank accounts, and managing payroll.

For individuals, including sole proprietors without employees, the Social Security Number (SSN) serves as their tax identification. The SSN is a nine-digit number issued by the Social Security Administration (SSA) for tracking earnings and administering benefits. The IRS also issues an Individual Taxpayer Identification Number (ITIN) to non-resident and resident aliens and others required to file U.S. tax returns but ineligible for an SSN. An ITIN is solely for tax processing and does not confer work authorization or immigration status.

Using US Tax IDs in International Transactions

When U.S. businesses engage in international trade, their U.S. tax identification numbers, predominantly the EIN, become relevant for foreign parties. Foreign suppliers, customers, or customs authorities often request an EIN to identify the U.S. entity for invoicing, customs declarations, and compliance. The EIN serves as the unique identifier for U.S. businesses in these cross-border interactions, as they do not register for VAT with the IRS or any other U.S. authority.

When exporting goods, U.S. businesses typically provide their EIN on invoices, especially when dealing with VAT-registered businesses abroad. This assists foreign entities in verifying business identity for their VAT compliance, such as potentially zero-rating imports from the U.S. For imports into the U.S., the EIN is also used for customs clearance. It is required on customs documentation, like the Customs Entry Form, to link imported goods to the correct business entity for tax and compliance. Foreign importers without a U.S. presence or an EIN may be assigned a Customs Assigned Importer Number (CAIN) by U.S. Customs and Border Protection to facilitate their import activities.

Distinguishing from Sales Tax

A common point of confusion arises when comparing Value Added Tax (VAT) with the U.S. sales tax system, as they are fundamentally different consumption taxes. VAT is a multi-stage tax levied at each step of the production and distribution chain, from raw materials to the final sale. Businesses collect VAT on their sales (output VAT) and can generally reclaim VAT paid on their purchases (input VAT), making the tax economically neutral. The ultimate burden of VAT falls on the end consumer.

In contrast, U.S. sales tax is a single-stage consumption tax applied only at the final retail sale of goods and services to the end consumer. Businesses collect sales tax from customers but do not typically pay sales tax on their inputs or reclaim it. Sales tax is primarily a state and local matter, with over 12,000 different taxing jurisdictions, unlike a federal VAT. The U.S. has not adopted a federal VAT system due to its federalist structure, concerns about potential regressivity, and the complexity of overhauling existing state-level sales tax systems.