Difference between revisions of "Value-Added Tax"

From GM-RKB
Jump to: navigation, search
m (Text replacement - "==References==" to "== References ==")
Line 26: Line 26:
 
[[Category:Concept]]
 
[[Category:Concept]]
 
__NOTOC__
 
__NOTOC__
 +
 +
=== 2019 ===
 +
* (Wikipedia, 2019) ⇒ https://en.wikipedia.org/wiki/Value-added_tax Retrieved:2019-8-15.
 +
** A '''value-added tax''' ('''VAT'''), known in some countries as a '''goods and services tax''' ('''GST'''), is a type of [[tax]] that is assessed incrementally. Like an income tax, it is based on the increase in value of a product or service at each stage of production or distribution. However, a VAT is collected by the end retailer and is usually a flat tax, and is therefore frequently compared to a sales tax. <P> VAT essentially compensates for the shared service and infrastructure provided in a certain locality by a state and funded by its taxpayers that were used in the elaboration of that product or service. Not all localities require VAT to be charged and goods and services for export may be exempted ([[duty free]]). VAT is usually implemented as a destination-based tax, where the tax rate is based on the location of the consumer and applied to the sales price. Confusingly, the terms VAT, GST, [[consumption tax]] and [[sales tax]] are sometimes used interchangeably. VAT raises about a fifth of total tax revenues both worldwide and among the members of the [[Organisation for Economic Co-operation and Development]] (OECD).<ref name="OECD 2018 VAT trends"></ref> As of 2018, 166 of the [[Member states of the United Nations|193 countries]] with full UN membership employ a VAT, including all OECD members except the United States,<ref name="OECD 2018 VAT trends"/>which uses a [[sales tax]] system instead. <P> There are two main methods of calculating VAT: the credit-invoice or invoice-based method, and the subtraction or accounts-based method. Using the credit-invoice method, sales transactions are taxed, with the customer informed of the VAT on the transaction, and businesses may receive a credit for VAT paid on input materials and services. The credit-invoice method is the most widely employed method, used by all national VATs except for Japan. Using the subtraction method, at the end of a reporting period, a business calculates the value of all taxable sales then subtracts the sum of all taxable purchases and the VAT rate is applied to the difference. The subtraction method VAT is currently only used by Japan, although subtraction method VATs, often using the name "flat tax", have been part of many recent tax reform proposals by US politicians.<ref name="CRS 2008"/><ref name="Cruz Flat Tax"/><ref name="USCC VAT white paper"/> With both methods, there are exceptions in the calculation method for certain goods and transactions, created for either pragmatic collection reasons or to counter tax fraud and evasion.

Revision as of 16:43, 15 August 2019

A Value-Added Tax is an consumption tax that involves a VAT reimbursement to the seller.



References

2016

  • https://en.wikipedia.org/wiki/Sales_tax#Types
    • QUOTE: Value added tax, in which tax is charged on all sales, thus avoiding the need for a system of resale certificates. Tax cascading is avoided by applying the tax only to the difference ("value added") between the price paid by the first purchaser and the price paid by each subsequent purchaser of the same item.


  • (Wikipedia, 2016) ⇒ http://wikipedia.org/wiki/value-added_tax Retrieved:2016-3-21.
    • A value-added tax (VAT) or goods and services tax (GST) is a popular way of implementing a consumption tax in Europe, Japan, and many other countries. It differs from the sales tax in that taxes are applied to the difference between the seller-purchased price and the resale price. This is accomplished by taking full tax on all sales, but refunding the tax difference to the sellers.

      The VAT is an alternative to a sales tax, to deal with a specific problem.

      With a sales tax, a business selling goods is responsible to make a subjective decision about the intent of the buyer, one which it may not be fully competent to make. If buyers intend to consume the goods themselves, then the seller must collect a tax on the purchase price. If instead buyers intend the goods as capital goods, to be resold at a profit after adding value to them, then the seller must not collect the tax. Sellers thus have an incentive to claim that a sale is non-taxable, in order to please customers, creating an incentive to under-collect taxes.

      The refund portion of a VAT removes that incentive, and incentivizes accurate collection. If the buyer is a businessperson, then the VAT is a temporary payment to the state, based on the purchase price, eventually to be reimbursed by the state for the initial payment when the goods are resold, usually after adding value to them. Hence collecting the tax is a way to get money back. Consumers, with no possible refund, have no reason to inaccurately report their intended use.

      The term "value added" refers to the sale price a business charges the customer for a product, minus the cost of materials and other taxable inputs.

      A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that with the sales tax, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, on the other hand, collections, remittances to the government, and credits for taxes that are already paid occur each time a business in the supply chain purchases products.


  • (Wikipedia, 2016) ⇒ http://wikipedia.org/wiki/ad_valorem_tax#Value-added_tax Retrieved:2016-3-21.
    • A value-added tax (VAT), or goods and services tax (GST), is tax on exchanges. It is levied on the added value 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, a VAT is neutral with respect to the number of passages that there are between the producer and the final consumer. A 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 by definition are consumed abroad) are usually not subject to VAT and VAT charged under such circumstances is usually refundable.


2019

  • (Wikipedia, 2019) ⇒ https://en.wikipedia.org/wiki/Value-added_tax Retrieved:2019-8-15.
    • A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. Like an income tax, it is based on the increase in value of a product or service at each stage of production or distribution. However, a VAT is collected by the end retailer and is usually a flat tax, and is therefore frequently compared to a sales tax.

      VAT essentially compensates for the shared service and infrastructure provided in a certain locality by a state and funded by its taxpayers that were used in the elaboration of that product or service. Not all localities require VAT to be charged and goods and services for export may be exempted (duty free). VAT is usually implemented as a destination-based tax, where the tax rate is based on the location of the consumer and applied to the sales price. Confusingly, the terms VAT, GST, consumption tax and sales tax are sometimes used interchangeably. VAT raises about a fifth of total tax revenues both worldwide and among the members of the Organisation for Economic Co-operation and Development (OECD).[1] As of 2018, 166 of the 193 countries with full UN membership employ a VAT, including all OECD members except the United States,[1]which uses a sales tax system instead.

      There are two main methods of calculating VAT: the credit-invoice or invoice-based method, and the subtraction or accounts-based method. Using the credit-invoice method, sales transactions are taxed, with the customer informed of the VAT on the transaction, and businesses may receive a credit for VAT paid on input materials and services. The credit-invoice method is the most widely employed method, used by all national VATs except for Japan. Using the subtraction method, at the end of a reporting period, a business calculates the value of all taxable sales then subtracts the sum of all taxable purchases and the VAT rate is applied to the difference. The subtraction method VAT is currently only used by Japan, although subtraction method VATs, often using the name "flat tax", have been part of many recent tax reform proposals by US politicians.[2][3][4] With both methods, there are exceptions in the calculation method for certain goods and transactions, created for either pragmatic collection reasons or to counter tax fraud and evasion.

  • Cite error: Invalid <ref> tag; no text was provided for refs named CRS 2008
  • Cite error: Invalid <ref> tag; no text was provided for refs named Cruz Flat Tax
  • Cite error: Invalid <ref> tag; no text was provided for refs named USCC VAT white paper