New Page 1

LA GRAMMATICA DI ENGLISH GRATIS IN VERSIONE MOBILE   INFORMATIVA PRIVACY

  NUOVA SEZIONE ELINGUE

 

Selettore risorse   

   

 

                                         IL Metodo  |  Grammatica  |  RISPOSTE GRAMMATICALI  |  Multiblog  |  INSEGNARE AGLI ADULTI  |  INSEGNARE AI BAMBINI  |  AudioBooks  |  RISORSE SFiziosE  |  Articoli  |  Tips  | testi pAralleli  |  VIDEO SOTTOTITOLATI
                                                                                         ESERCIZI :   Serie 1 - 2 - 3  - 4 - 5  SERVIZI:   Pronunciatore di inglese - Dizionario - Convertitore IPA/UK - IPA/US - Convertitore di valute in lire ed euro                                              

 

 

WIKIBOOKS
DISPONIBILI
?????????

ART
- Great Painters
BUSINESS&LAW
- Accounting
- Fundamentals of Law
- Marketing
- Shorthand
CARS
- Concept Cars
GAMES&SPORT
- Videogames
- The World of Sports

COMPUTER TECHNOLOGY
- Blogs
- Free Software
- Google
- My Computer

- PHP Language and Applications
- Wikipedia
- Windows Vista

EDUCATION
- Education
LITERATURE
- Masterpieces of English Literature
LINGUISTICS
- American English

- English Dictionaries
- The English Language

MEDICINE
- Medical Emergencies
- The Theory of Memory
MUSIC&DANCE
- The Beatles
- Dances
- Microphones
- Musical Notation
- Music Instruments
SCIENCE
- Batteries
- Nanotechnology
LIFESTYLE
- Cosmetics
- Diets
- Vegetarianism and Veganism
TRADITIONS
- Christmas Traditions
NATURE
- Animals

- Fruits And Vegetables


ARTICLES IN THE BOOK

  1. Account
  2. Accountancy
  3. Accountant
  4. Accounting cycle
  5. Accounting equation
  6. Accounting methods
  7. Accounting reform
  8. Accounting software
  9. Accounts payable
  10. Accounts receivable
  11. Accrual
  12. Adjusted basis
  13. Adjusting entries
  14. Advertising
  15. Amortization
  16. Amortization schedule
  17. Annual report
  18. Appreciation
  19. Asset
  20. Assets turnover
  21. Audit
  22. Auditor's report
  23. Bad debt
  24. Balance
  25. Balance Sheet
  26. Banking
  27. Bank reconciliation
  28. Bankruptcy
  29. Big 4 accountancy firm
  30. Bond
  31. Bookkeeping
  32. Book value
  33. British qualified accountants
  34. Business
  35. Business process overhead
  36. Capital asset
  37. Capital goods
  38. Capital structure
  39. Cash
  40. Cash flow
  41. Cash flow statement
  42. Certified Management Accountant
  43. Certified Public Accountant
  44. Chartered Accountant
  45. Chartered Cost Accountant
  46. Chart of accounts
  47. Common stock
  48. Comprehensive income
  49. Consolidation
  50. Construction in Progress
  51. Corporation
  52. Cost
  53. Cost accounting
  54. Cost of goods sold
  55. Creative accounting
  56. Credit
  57. Creditor
  58. Creditworthiness
  59. Current assets
  60. Current liabilities
  61. Debentures
  62. Debits and Credits
  63. Debt
  64. Debtor
  65. Default
  66. Deferral
  67. Deferred tax
  68. Deficit
  69. Deloitte Touche Tohmatsu
  70. Depreciation
  71. Direct tax
  72. Dividend
  73. Double-entry bookkeeping system
  74. Earnings before interest and taxes
  75. Earnings Before Interest, Taxes and Depreciation
  76. Earnings before Interest, Taxes, Depreciation and Amortization
  77. Engagement Letter
  78. Equity
  79. Ernst a& Young
  80. Expense
  81. Fair market value
  82. FIFO and LIFO accounting
  83. Finance
  84. Financial accounting
  85. Financial audit
  86. Financial statements
  87. Financial transaction
  88. Fiscal year
  89. Fixed assets
  90. Fixed assets management
  91. Fixed Assets Register
  92. Forensic accounting
  93. Freight expense
  94. Fund Accounting
  95. Furniture
  96. General journal
  97. General ledger
  98. Generally Accepted Accounting Principles
  99. Going concern
  100. Goodwill
  101. Governmental accounting
  102. Gross income
  103. Gross margin
  104. Gross profit
  105. Gross sales
  106. Historical cost
  107. Hollywood accounting
  108. Imprest system
  109. Income
  110. Income tax
  111. Indirect tax
  112. Insurance
  113. Intangible asset
  114. Interest
  115. Internal Revenue Code
  116. International Accounting Standards
  117. Inventory
  118. Investment
  119. Invoice
  120. Itemized deduction
  121. KPMG
  122. Ledger
  123. Lender
  124. Leveraged buyout
  125. Liability
  126. Licence
  127. Lien
  128. Liquid asset
  129. Long-term assets
  130. Long-term liabilities
  131. Management accounting
  132. Matching principle
  133. Mortgage
  134. Net Income
  135. Net profit
  136. Notes to the Financial Statements
  137. Office equipment
  138. Operating cash flow
  139. Operating expense
  140. Operating expenses
  141. Ownership equity
  142. Patent
  143. Payroll
  144. Pay stub
  145. Petty cash
  146. Preferred stock
  147. PricewaterhouseCoopers
  148. Profit
  149. Profit and loss account
  150. Pro forma
  151. Purchase ledger
  152. Reserve
  153. Retained earnings
  154. Revaluation of fixed assets
  155. Revenue
  156. Revenue recognition
  157. Royalties
  158. Salary
  159. Sales ledger
  160. Sales tax
  161. Salvage value
  162. Shareholder
  163. Shareholder's equity
  164. Single-entry accounting system
  165. Spreadsheet
  166. Stakeholder
  167. Standard accounting practice
  168. Statement of retained earnings
  169. Stock
  170. Stockholders' deficit
  171. Stock option
  172. Stock split
  173. Sunk cost
  174. Suspense account
  175. Tax bracket
  176. Taxes
  177. Tax expense
  178. Throughput accounting
  179. Trade credit
  180. Treasury stock
  181. Trial balance
  182. UK generally accepted accounting principles
  183. United States
  184. Value added tax
  185. Value Based Accounting Standards and Principles
  186. Write-off
 



ACCOUNTING
This article is from:
http://en.wikipedia.org/wiki/Value_added_tax

All text is available under the terms of the GNU Free Documentation License: http://en.wikipedia.org/wiki/Wikipedia:Text_of_the_GNU_Free_Documentation_License 

Value added tax

From Wikipedia, the free encyclopedia

 

Value added tax (VAT) is tax on exchanges. It is levied on the value added that results from each exchange. It differs from a sales tax because a sales tax is levied on the total value of the exchange. For this reason VAT is neutral with respect to the number of passages that there are between the producer and the final consumer.

VAT is an indirect tax, in that the tax is collected from someone other than the person who actually bears the cost of the tax (namely the seller rather than the consumer). To avoid double taxation on final consumption, exports (which are, by definition, consumed abroad) are usually not subject to VAT or VAT which led to such consequences is refunded.

VAT was invented by a French economist in 1954. Maurice Lauré, joint director of the French tax authority, the Direction générale des impôts, as taxe sur la valeur ajoutée (TVA in French) was first to introduce VAT with effect from 10 April 1954 for large businesses, and extended over time to all business sectors. In France, it is the most important source of state finance, accounting for approximately 45% of state revenues.

Personal end-consumers of products, consumers and services cannot recover VAT on purchases, but businesses are able to recover VAT on the materials and services that they buy to make further supplies or services directly or indirectly sold to end-users. In this way, the total tax levied at each stage in the economic chain of supply is a constant fraction of the value added by a business to its products, and most of the cost of collecting the tax is borne by business, rather than by the state. VAT was invented because very high sales taxes and tariffs encourage cheating and smuggling. It has been criticized on the grounds that it is a regressive tax.

Comparison with a sales tax

VAT differs from a conventional sales tax in that VAT is levied on every business as a fraction of the price of each taxable sale they make, but they are in turn reimbursed VAT on their purchases, so the VAT is applied to the value added to the goods at each stage of production.

Sales taxes are normally only charged on final sales to consumers: because of reimbursement, VAT has the same overall economic effect on final prices. The main difference is the extra accounting required by those in the middle of the supply chain; this disadvantage of VAT is balanced by application of the same tax to each member of the production chain regardless of its position in it and the position of its customers, reducing the effort required to check and certify their status. When the VAT has few, if any exemptions such as with GST in New Zealand, payment of VAT is even simpler.

A general economic rule of thumb is that if sales taxes exceed 10 percent, people start engaging in widespread tax evading activity. (Buying over the Internet, pretending to be a business, buying at wholesale, buying products through an employer etc.) On the other hand, total VAT rates can rise above 10 percent without widespread evasion because of the novel collection mechanism.[citation needed] However because of its particular mechanism of collection, VAT becomes quite easily the target of specific frauds like carousel fraud which can be very expensive in terms of loss of tax incomes for the States.

Collection Mechanism

The standard way to implement a VAT is to say a business owes some percentage on the price of the good minus all taxes previously paid on the good. If VAT rates were 10 percent, an orange juice maker would pay 10 percent of the $5 per gallon price ($0.50) minus taxes previously paid by the orange farmer (maybe $0.20). In this example, the orange juice maker would have a ($0.30 tax liability). Each business has a strong incentive for its suppliers to pay their taxes, allowing VAT rates to be higher with less tax evasion than a retail sales tax.

Example

Consider the manufacture and sale of any item, which in this case we will call a widget.

Without any sales tax

  • A widget manufacturer spends $1 on raw materials and uses them to make a widget.
  • The widget is sold wholesale to a widget retailer for $1.20, making a profit of $0.20.
  • The widget retailer then sells the widget to a widget consumer for $1.50, making a profit of $0.30

With a U.S.-style sales tax

With a 10% sales tax:

  • The manufacturer pays $1.00 for the raw materials, certifying it is not a final consumer.
  • The manufacturer charges the retailer $1.20, checking that the retailer is not a consumer, leaving the same profit of $0.20.
  • The retailer charges the consumer $1.65 ($1.50 + 10%) and pays the government $0.15, leaving the same profit of $0.30.

So the consumer has paid 10% ($0.15) extra, compared to the no taxation scheme, and the government has collected this amount in taxation. The retailers have not lost anything directly to the tax, but they do have the extra paperwork to do so that they correctly pass on to the government the sales tax they collect. Suppliers and manufacturers have the administrative burden of supplying correct certifications, and checking that their customers (retailers) aren't consumers.

With a VAT

With a 10% VAT:

  • The manufacturer pays $1.10 ($1 + 10%) for the raw materials, and the seller of the raw materials pays the government $0.10.
  • The manufacturer charges the retailer $1.32 ($1.20 + 10%) and pays the government $0.02 ($0.12 minus $0.10), leaving the same profit of $0.20.
  • The retailer charges the consumer $1.65 ($1.50 + 10%) and pays the government $0.03 ($0.15 minus $0.12), leaving the same profit of $0.30.

So the consumer has paid 10% ($0.15) extra, compared to the no taxation scheme, and the government has collected this amount in taxation. The businesses have not lost anything directly to the tax, but they do have the extra paperwork to do so that they correctly pass on to the government the difference between what they collect in VAT (output VAT, an 11th of their income) and what they spend in VAT (input VAT, an 11th of their expenditure).

Note that in each case the VAT paid is equal to 10% of the profit, or 'value added'.

The advantage of the VAT system over the sales tax system is that businesses cannot hide consumption (such as wasted materials) by certifying it is not a consumer.

Limitations to Example & VAT

In the above example, we assumed that the same number of widgets were made and sold both before and after the introduction of the tax. This is not true in real life.

The fundamentals of supply and demand suggest that any tax raises the cost of transaction for someone, whether it is the seller or purchaser. In raising the cost, either the demand curve shifts leftward, or the supply curve shifts leftwards. The two are functionally equivalent. Consequently, the quantity of a good purchased, and/or the price for which it is sold, decrease.

This shift in supply and demand is not incorporated into the above example, for simplicity and because these effects are different for every type of good. The above example assumes the tax is non-distortionary.

A VAT, like as any other tax, distorts what would have happened without it. Because the price for someone rises, the quantity of goods traded decreases. Correspondingly, some people are worse off by more than the government is made better off by tax income . That is, more is lost due to supply and demand shifts than is gained in tax. This is known as a deadweight loss. The income lost by the economy is greater than the government's income; the tax is inefficient. The entire amount of the government's income (the tax revenue) may not be a deadweight drag, if the tax revenue is used for productive spending or has positive externalities - in other words, governments may do more than simply consume the tax income. While distortions occur, consumption taxes like VAT are often considered superior because they distort incentives to invest, save and work less than other types of taxation - in other words, a VAT discourages consumption rather than production.


A Supply-Demand Analysis of a Taxed Market
 

In the above diagram,

Deadweight loss: the area of the triangle formed by the tax income box, the original supply curve, and the demand curve

Government's tax income: the grey area

Total consumer surplus after the shift: the green area

Total producer surplus after the shift: the yellow area

VAT criticisms

The "Value added tax" has been criticized as the burden of it relies on personal end-consumers of products and is therefore, as any sales tax based on the consumption of essentials, a regressive tax (the poor pay more, in comparison, than the rich). French President Jacques Chirac has often pleaded for a reduction of European VAT concerning catering, in order to win favour from this sector.

Revenues from a value added tax are frequently lower than expected because they are difficult and costly to administer and collect. In many countries, however, where collection of personal income taxes and corporate profit taxes has been historically weak, VAT collection has been more successful than other types of taxes. VAT has become more important in many jurisdictions as tariff levels have fallen worldwide due to trade liberalisation, as VAT has essentially replaced lost tariff revenues. Whether the costs and distortions of value added taxes are lower than the economic inefficiencies and enforcement issues (e.g. smuggling) from high import tariffs is debated, but theory suggests value added taxes are far more efficient.

Due to the fact that exports are generally zero-rated (and VAT refunded or offset against other taxes), this is often where VAT fraud occurs. In sectors or countries where VAT fraud is prevalent, attempts by authorities to control fraud may have unintended consequences, and raise costs for honest companies. This problem is also true of other types of taxation, however.

Certain industries (small-scale services, for example) tend to have more VAT avoidance, particularly where cash transactions predominate, and VAT may be criticised for encouraging this. From the perspective of government, however, VAT may be preferable because it captures at least some of the value-added. For example, a carpenter may offer to provide services for cash (i.e. without a receipt, and without VAT) to a homeowner, who usually cannot claim input VAT back. The homeowner will hence bear lower costs and the carpenter may be able to avoid other taxes (profit or payroll taxes). The government, however, may still receive VAT for various other inputs (lumber, paint, gasoline, tools, etc) sold to the carpenter, who would be unable to reclaim the VAT on these inputs. While the total tax receipts may be lower compared to full compliance, it may not be lower than under other feasible taxation systems.


 

VAT in the European Union

A common VAT system is compulsory for member states of the European Union. The EU VAT system is imposed by a series of European Union directives, the most important of which is the Sixth VAT Directive (Directive 77/388/EC). Nevertheless, some member states have negotiated VAT exemption or variable rates for regions or territories. The Canary Islands, Ceuta and Melilla (Spain), Gibraltar (UK) and Åland Islands (Finland) are outside the scope of the EU system of VAT, while Madeira (Portugal) is allowed to levy variable rates.

Under the EU system of VAT, where a person carrying on an economic activity supplies goods and services to another person, and the value of the supplies passes financial limits, the supplier is required to register with the local taxation authorities and charge its customers, and account to the local taxation authority for, VAT (although the price may be inclusive of VAT, so VAT is included as part of the agreed price, or exclusive of VAT, so VAT is payable in addition to the agreed price).

VAT that is charged by a business and paid by its customers is known as output VAT (that is, VAT on its output supplies). VAT that is paid by a business to other businesses on the supplies that it receives is known as input VAT (that is, VAT on its input supplies). A business is generally able to recover input VAT to the extent that the input VAT is attributable to (that is, used to make) its taxable outputs. Input VAT is recovered by setting it against the output VAT for which the business is required to account to the government, or, if there is an excess, by claiming a repayment from the government.

Different rates of VAT apply in different EU member states. The minimum standard rate of VAT throughout the EU is 15%, although reduced rates of VAT, as low as 5%, are applied in various states on various sorts of supply (for example, domestic fuel and power in the UK). The maximum rate in the EU is 25%.

The Sixth VAT Directive requires certain goods and services to be exempt from VAT (for example, postal services, medical care, lending, insurance, betting), and certain other goods and services to be exempt from VAT but subject to the ability of an EU member state to opt to charge VAT on those supplies (such as land and certain financial services). Input VAT that is attributable to exempt supplies is not recoverable, although a business can increase its prices so the customer effectively bears the cost of the 'sticking' VAT (the effective rate will be lower than the headline rate and depend on the balance between previously taxed input and labour at the exempt stage).

Finally, some goods and services are "zero-rated". The zero-rate is a positive rate of tax calculated at 0%. Supplies subject to the zero-rate are still "taxable supplies", i.e. they have VAT charged on them. In the UK, examples include most food, books, drugs, and certain kinds of transport. The zero-rate is not featured in the EU Sixth Directive as it was intended that the minimum VAT rate throughout Europe would be 5%. However zero-rating remains in some Member States, most notably the UK, as a legacy of pre-EU legislation. These Member States have been granted a derogation to continue existing zero-rating but cannot add new goods or services.

When goods are imported into the EU from other states, VAT is generally charged at the border, at the same time as customs duty. "Acquisition" VAT is payable when goods are acquired in one EU member state from another EU member state (this is done not at the border but through an accounting mechanism). EU businesses are often required to charge themselves VAT under the reverse charge mechanism where services are received from another member state or from outside of the EU.

Businesses can be required to register for VAT in EU member states, other than the one in which they are based, if they supply goods via mail order to those states, over a certain threshold. Businesses that are established in one member state but which receive supplies in another member state may be able to reclaim VAT charged in the second state under the provisions of the Eighth VAT Directive (Directive 79/1072/EC). A similar directive, the Thirteenth VAT Directive (Directive 86/560/EC), also allows businesses established outside the EU to recover VAT in certain circumstances.

Following changes introduced on 1 July 2003 (under Directive 2002/38/EC), non-EU businesses providing digital electronic commerce and entertainment products and services to EU countries are also required to register with the tax authorities in the relevant EU member state, and to collect VAT on their sales at the appropriate rate, according to the location of the purchaser. Alternatively, under a special scheme, non-EU businesses may register and account for VAT on only one EU member state. This produces distortions as the rate of VAT is that of the member state of registration, not where the customer is located, and an alternative approach is therefore under negotiation, whereby VAT is charged at the rate of the member state where the purchaser is located.

The differences between different rates of VAT was often originally justified by certain products being "luxuries" and thus bearing high rates of VAT, whereas other items were deemed to be "essentials" and thus bearing lower rates of VAT. However, often high rates persisted long after the argument was no longer valid. For instance, France taxed cars as a luxury product (33%) up into the 1980s, when most of the French households owned one or more cars. Similarly, in the UK, clothing for children is "zero rated" whereas clothing for adults is subject to VAT at the standard rate of 17.5%.

Rules on pricing within the EU

  • Where most of the trade is business-to-consumer, prices must include VAT.
  • Where most of the trade is business-to-business, prices do not have to include VAT.

Value Added Tax in Denmark, Norway and Sweden (MOMS)

MOMS (Danish: Merværdi Omsætnings Skat, Norwegian: merverdiavgift (abriviated MVA), Swedish: mervärdesskatt, earlier mervärdesomsättningsskatt) is a Danish, Norwegian and Swedish sales tax. MOMS is the Danish, Norwegian and Swedish term for VAT. Like other countries' sales and VAT taxes, MOMS is a regressive indirect tax.

In Denmark, VAT is only applied at one level, and is not split into two levels as in other countries (e.g. Germany), where VAT is split into VAT for foodstuffs and VAT for nonfood. The current percentage in Denmark is 25%. That makes Denmark one of the countries with the highest value added tax, alongside Norway and Sweden.

In Norway, VAT is split into three levels: 25% is the general VAT, 13% (Increases to 14% 2007-01-01) for foods and restaurant take-out (food eaten in a restaurant has 25%), 8% for person transport, movie tickets, and hotel stays. Most printed matter is still free of VAT.

In Sweden, VAT is split into three levels: 25% for most things, 12% for foods and 6% for printed matter.

MOMS replaced OMS (Danish "Omsætningsafgift", Swedish "omsättningsskatt") in 1967, which was a tax applied exclusively for retailers.

Value Added Tax in India

In India, VAT replaced sales tax on 4 January 2005. Though some states did not opt for VAT (for political reasons), majority of the States embraced VAT, with Haryana being the first. The Empowered Committee, constituted by Government of India, provided the basic framework for uniform VAT laws in the states but due to the federal nature of Indian constitution, States do have a liberty to set their own valuations for the VAT levied in their own territory.

VAT - The A.P experience

The Andhra Pradesh Value Added Tax Act, 2005 came into force on 2005-4-1 and contains six Schedules. Schedule I contains goods generally exempted from tax. Schedule II deals with zero rated transactions like exports and Schedule III contains goods taxable at 1%, namely jewellery made from bullion and precious stones. Goods taxable at 4% are listed under Schdule IV. Majority of foodgrains and goods of national importance, like iron and steel are list under this head. Schedule V deals with Standard Rate Goods, taxable at 12.5%. All goods that are not listed elsewhere in the Act fall under this head. The VI Schedule is the bread and butter of all the State Govts. This Schedule contains goods taxed at special rates (more than 50%), like liquor and petroleum products. There are thus three rates of taxes in India, namely 1%; 4% and 12.5%.

The Act prescribes threshold limits for VAT registration - dealers with a taxable turnover of over Rs.40.00 lacs, in a tax period of 12 months, are mandatorily registered as VAT dealers. Dealers with a taxable turnover, in a tax period of 12 months, between Rs.5.00 to 40.00 lacs are registered as Turnover Tax (TOT) dealers. While the former category of dealers are eligible for input tax credit, the latter category of dealers are not eligible for input tax credit. A VAT dealer pays tax at the rate specifed in the Schedules. The sales of a TOT dealer are all taxable at 1%. A VAT dealer has to file a monthly return disclosing purchases and sales. A TOT dealer has to file a quarterly return disclosing only sale turnovers. While a VAT dealer can buy goods for business from anywhere in the country, a TOT dealer is barred from buying outside the State of A.P.

The A.P VAT Act appears to be the most liberal VAT law in India. It has simplified the registration procedures and provides for across the board input tax credit (with a few exceptions) for business transactions. A unique feature of registration in A.P is the facility of voluntary VAT registration and input tax credit for start-ups.

The A.P VAT Act also provides for transitional relief (TR) for goods on hand as of 2005-4-1. However, these goods ought to have been purchased from registered dealers between 2005-4-1 to 2005-3-31. This is a bold step compared to the 3 months TR provided by several developed countries.

The APVAT Act not only provides for tax refunds for exporters (refund of tax paid on inputs used in the manufacture of goods exported), it also provides for refund of tax in cases where the inputs are taxed at 12.5% and outputs are taxed at 4%.

The VAT Act in A.P is administered by a highly professional team of officers who were well trained by the PMT (Project Management Team) before the Act came into force. The Commercial Taxes Department (department to collect VAT and other taxes) has also put in place a software pacakage called VATIS (developed by TCS) with intra net on line connectivity to all the offices in the State. All the documents and forms received from the dealers are acknowledged and fed in VATIS to generate registration certificates and tax demand notices.

VAT, to be successful, relies on voluntary tax compliance. Since VAT believes in self assessments, dealers are required to maintain proper records, issue tax invoices, file correct tax returns etc. The opposite seems to be happening in India. Businesses are still run on traditional lines. Cash transactions are order of the day. The unorganised sector dominates the market. The hope of higher tax compliance and lesser evasion is still a far cry in A.P. This is reflected in the high % of return defaulters (14%), a high % of credit returns (35%) and a high % of nil returns (20%). That is, roughly 70% of VAT dealers are presently not paying any tax. Filing of credit returns is rampant among FMCG, Consumer Durables, Drugs and Medicines and Fertilizers. The margins are low in this sector (ranging between 2 to 5%). The value addition is not enough to yield revenue as of now. Credits offered by manufacturers compounds the problem. The question is - in a typical WalMart-like purchases and sales scenario, can there be more output tax than input tax? When purchases consistently exceed sales, can output tax exceed input tax? If a VAT dealer can balance his/her purchases and sales, can there be a net tax to the State? Is there a mathematical model or paradigm which can give value added tax and which can reduce the % of credit returns? There are no ready answers for these queries. The only remedy seems to be the restriction of input tax to the corresponding purchase value of goods put to sales. In fact a two tier system can be adopted to counter the credit returns - allow full input tax to manufacturers and restrict input tax to the purchase value of goods put to sale to traders. Restricting input tax to 4% in the case of inter state sales and in the case of products taxable at 12.5% seems to be another solution.

Value Added Tax in Mexico

Impuesto al Valor Agregado (IVA, "value-added tax" in Spanish) is a tax applied in Mexico and other countries of Latin America and Spain. In Chile it is called Impuesto a las Ventas y Servicios, in Spain Impuesto sobre el Valor Añadido and in Peru it is called Impuesto General a las Ventas or IGV.

Prior to the IVA, a similar tax called impuesto a las ventas ("sales tax" in the Spanish language) had been applied in Mexico. In September, 1966, the first attempt to apply the IVA took place when revenue experts declared that the IVA should be a modern equivalent of the sales tax as it occurred in France. At the convention of the Inter-American Center of Revenue Administrators in April and May, 1967, the Mexican representation declared that the application of a value-added tax would not be possible in Mexico at the time. In November, 1967, other experts declared that although this is one of the most equitable indirect taxes, its application in Mexico could not take place.

In response to these statements, direct sampling of members in the private sector took place as well as field trips to the European countries this tax was applied or it was soon to be applied. In 1969, the first attempt to substitute the mercantile-revenue tax for the value-added tax took place. On December 29, 1978 the Federal government published the official application of the tax beginning on January 1, 1980 in the Official Journal of the Federation.

Value Added Tax in the United States

In the United States, the state of Michigan uses a form of VAT known as the "Single Business Tax" (SBT) as its form of general business taxation. It is the only state in the US to use a VAT. When it was adopted in 1975, it replaced seven business taxes, including a corporate income tax. Under current Michigan law, the SBT is scheduled to be completely phased-out by 2009.

Most states have sales tax charged to the end buyer only. Sales tax rates are anywhere from 0%-8.8% depending upon the state and the municipality. Generally no sales tax is charged for most services. This is a big difference between countries that levy a VAT tax and Sales Tax levied in the United States.

VAT Rates

EU countries

Non-EU countries

Note 1: Some Canadian provinces collect 14% for harmonized sales tax, a combined federal/provincial VAT. In the rest, the federal GST is 6% and if the province charges sales tax it is separate and is not a VAT. No real "reduced rate" but rebates are generally available for new housing effectively reducing the tax to 4.5%

Note 2: These taxes do not apply in Hong Kong and Macau, which are financially independent as special administrative regions.

Note 3: In October 2006, the government announced that the reduced rate would be 7% from 1 March 2007. The reduced rate applies to most food, heating, hotel stays, printed matter, and (from 1 March 2007) food consumed in restaurants.

Note 4: VAT is not implemented in 2 of India's 28 states.

Note 5: The VAT in Israel is in the process of being gradually reduced. It was reduced from 18% to 17% on March 2004, to 16.5% on September 2005, and was set to its current rate on July 1, 2006. There are plans to further reduce it in the near future, but they depend on political changes in the Israeli parliament.

Note 6: In the 2005 Budget, the government announced that GST would be introduced in January 2007. Many details have not yet been confirmed but it has been stated that essential goods and small businesses would be exempted or zero rated. Rates have not yet been established.

Note 7: The President of the Philippines has the power to raise the tax to 12% after January 1, 2006. The tax was raised to 12% on February 1.

Note 8: On 13th of November 2006, Prime Minister Lee Hsien Loong announced that the GST would be increased to 7%. More details of the GST increase would be announced on 15th Feb 2007. [Source: http://www.channelnewsasia.com/stories/singaporelocalnews/view/241058/1/.html]

VAT registered

VAT registered means registered for VAT purposes, i.e. entered into an official VAT payers register of a country. Both natural persons and legal entities can be VAT registered. Countries that use VAT have established different thresholds for remuneration derived by natural persons/legal entities during a calendar year (or a different period) by exceeding which the VAT registration is compulsory. Natural persons/legal entities that are VAT registered are obliged to calculate VAT on certain goods/services that they supply and pay VAT into particular state budget. VAT registered persons/entities are entitled to VAT deduction under legislatory regulations of particular country.

See also

  • List of tax rates around the world
  • Gross price
  • Jaffa Cake – Its non-VAT status was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit.
  • Net price
  • Revenue On-Line Service
  • VAT 3
  • Pretax
  • Channel Islands VAT loophole – A loophole that enables companies to avoid paying VAT on low value products.
  • Carousel VAT Fraud (Missing Trader Fraud)
  • Progressive tax
  • Regressive tax
  • Income Tax
  • FairTax
  • Flat Tax
  • NESARA
  • Sales tax

References

  • MOMS, Politikens Nudansk Leksikon 2002, ISBN 87-604-1578-9

External links

  • What is VAT?: General overview
  • EUROPE: Dont' you mind the tax burden? - The optimal direct/indirect tax mix: The Irish experiment
  • Irish VAT law
  • European VAT rates by service type
  • [1] - German VAT
  • VAT/GST sales tax rates around the world
  • Consolidated version of the Sixth VAT Directive (398k pdf)
  • HM Revenue & Customs
  • UK VAT Threshold Rates
  • Experts stumped by leap in trade gap, Guardian, September 10, 2005, discusses "missing trader fraud" and "carousel fraud".
  • Indian VAT
  • What is the Single Business Tax? (Michigan Department of Treasury)
Retrieved from "http://en.wikipedia.org/wiki/Value_added_tax"
 

 

 

  

 

 


 

 
CONDIZIONI DI USO DI QUESTO SITO
L'utente può utilizzare il nostro sito solo se comprende e accetta quanto segue:

  • Le risorse linguistiche gratuite presentate in questo sito si possono utilizzare esclusivamente per uso personale e non commerciale con tassativa esclusione di ogni condivisione comunque effettuata. Tutti i diritti sono riservati. La riproduzione anche parziale è vietata senza autorizzazione scritta.
  • Il nome del sito EnglishGratis è esclusivamente un marchio e un nome di dominio internet che fa riferimento alla disponibilità sul sito di un numero molto elevato di risorse gratuite e non implica dunque alcuna promessa di gratuità relativamente a prodotti e servizi nostri o di terze parti pubblicizzati a mezzo banner e link, o contrassegnati chiaramente come prodotti a pagamento (anche ma non solo con la menzione "Annuncio pubblicitario"), o comunque menzionati nelle pagine del sito ma non disponibili sulle pagine pubbliche, non protette da password, del sito stesso.
  • La pubblicità di terze parti è in questo momento affidata al servizio Google AdSense che sceglie secondo automatismi di carattere algoritmico gli annunci di terze parti che compariranno sul nostro sito e sui quali non abbiamo alcun modo di influire. Non siamo quindi responsabili del contenuto di questi annunci e delle eventuali affermazioni o promesse che in essi vengono fatte!
  • L'utente, inoltre, accetta di tenerci indenni da qualsiasi tipo di responsabilità per l'uso - ed eventuali conseguenze di esso - degli esercizi e delle informazioni linguistiche e grammaticali contenute sul siti. Le risposte grammaticali sono infatti improntate ad un criterio di praticità e pragmaticità più che ad una completezza ed esaustività che finirebbe per frastornare, per l'eccesso di informazione fornita, il nostro utente. La segnalazione di eventuali errori è gradita e darà luogo ad una immediata rettifica.

     

    ENGLISHGRATIS.COM è un sito personale di
    Roberto Casiraghi e Crystal Jones
    email: robertocasiraghi at iol punto it

    Roberto Casiraghi           
    INFORMATIVA SULLA PRIVACY              Crystal Jones


    Siti amici:  Lonweb Daisy Stories English4Life Scuolitalia
    Sito segnalato da INGLESE.IT