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> So then you're still paying taxes twice. They're two separate taxes, paid by two different entities. Nobody is "paying taxes twice". VAT is paid by the end
by Kadin 10y ago
> So then you're still paying taxes twice.
They're two separate taxes, paid by two different entities. Nobody is "paying taxes twice". VAT is paid by the end consumer. It is generally collected by the retailer and forwarded directly on to the government, because otherwise enforcement would be too difficult.
The manufacturer has a variety of taxes that may be due, depending on jurisdiction, on its profits, revenues, payroll, or other aspects of the business. In conventional retail setups, where you have a manufacturer supplying goods to a distributor or wholesaler, wholesaler to retailer, retailer to customer, there are corporate taxes due on each company in the chain. But none of them pay VAT on the intermediate goods; that's on the final consumer.
VAT is basically a tax on consumption; corporate taxes are taxes on (usually) income, and can be seen as the price one pays to a country for the use of its legal system and for the privilege of creating liability-shielding legal entities there.
- bardworx 10y agoI might not have been clear in my original response. I wasn't referring to VAT with regard to double taxation but on paying corp taxes in an EU country and then again when the funds are transferred back to the US. Even though US does provide some tax credits to companies that pay corp tax in EU, the amount is based on individual agreements between the two countries.
- disiplus 10y agoThere are usually agreements about double taxation between countries so u dont pay double taxes. http://europa.eu/youreurope/citizens/work/taxes/double-taxation/index_en.htm http://europa.eu/youreurope/citizens/work/taxes/double-taxat...
- uiri 10y ago> But none of them pay VAT on the intermediate goods; that's on the final consumer. This is not true. This describes how sales taxes work in the US - sales taxes are due on retail but not wholesale transactions. VAT is due on each transaction in the chain - manufacturer to wholesaler, wholesaler to retailer, retailer to consumer. However, the wholesaler can deduct the VAT that it paid to the manufacturer from the VAT that it passes to the government and the retailer can do the same for the VAT that it paid to the wholesaler. In this way, there is no multiple taxation of the retail sale. GST and PST (despite the latter's name) in Canada work the same way.