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And not even Value Added Tax, but Value Tax. If a shop buys something for $10 and sells it for $15, the value added is $5 and you pay a percentage of that as V
by ptaipale 11y ago
And not even Value Added Tax, but Value Tax.
If a shop buys something for $10 and sells it for $15, the value added is $5 and you pay a percentage of that as VAT.
What the parent proposes is that you pay a percentage of $15 as tax, and cannot deduct the cost of sales (no deductions, ever).
- newjersey 11y agoForgive my ignorance but what happens in the case that a vendor buys something for $10 and sells for $5? Do they get a rebate from the vat office?
- ptaipale 11y agoWell, effectively, yes. Each seller charges VAT rate on his output and passes the buyer a special invoice that indicates the amount of tax charged. Buyers who are subject to VAT on their own sales (output tax), consider the tax on the purchase invoices as input tax and can deduct the sum from their own VAT liability. The difference between output tax and input tax is paid to the government (or a refund is claimed, in the case of negative liability). https://en.wikipedia.org/wiki/Value-added_tax https://en.wikipedia.org/wiki/Value-added_tax