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> VAT is a tax paid by the "last" link in the chain, the user, not by the supplier. Not quite. As Wikipedia puts it, VAT is collected incrementally, based on t

> VAT is a tax paid by the "last" link in the chain, the user, not by the supplier. Not quite. As Wikipedia puts it, VAT is collected incrementally, based on the surplus value, added to the price on the work at each stage of production. That is the actual tax incidence. That the tax payment is channeled via the last link in chain is just a technicality relevant for the most efficient implementation of this incremental scheme.

jaclaz 9y ago
>Not quite. The one that pays the actual tax is the one getting the last (most valued) item, i.e. the final user (consumer). The way it is collected (incrementally) is not connected to WHO pays WHAT. If an user pays 122 € (100+22 €) that is the total tax (and is payed integrally by the user). The government gets in total 22 € (integrally paid by the customer at the end) but it receives that amount in (say) 3 steps by differnt actors: 1 - 10% of 30= 3 The manufacturer buys the raw material, pays the VAT to the supplier that (hypothetically) has no preceding VAT costs and thus must give to the government the whole 3 € 2 - 22% of 80= 17,60-3= 14,60 then he does something with it and resells the product for 80 (i.e. it adds value, reselling it for 80 + VAT to a shop) and has to give to the government the differnece 3- 22% of 100=22-17,60=4,40 the shop sells the item to a consumer and has to give to the government the difference The government gets 3+14.60+4.40=22 € The final user has paid 22 € The incremental collection method allows to have the tax largely paid in advance, but the amount at the end comes out of the final user pocket. The Wikipedia has it very clear: https://en.wikipedia.org/wiki/Value-added_tax https://en.wikipedia.org/wiki/Value-added_tax https://en.wikipedia.org/wiki/Value-added_tax#With_a_value-added_tax https://en.wikipedia.org/wiki/Value-added_tax#With_a_value-a... https://upload.wikimedia.org/wikipedia/commons/2/28/VAT3b22.png https://upload.wikimedia.org/wikipedia/commons/2/28/VAT3b22....

jaclaz 9y ago

>Not quite. The one that pays the actual tax is the one getting the last (most valued) item, i.e. the final user (consumer). The way it is collected (incrementally) is not connected to WHO pays WHAT. If an user pays 122 € (100+22 €) that is the total tax (and is payed integrally by the user). The government gets in total 22 € (integrally paid by the customer at the end) but it receives that amount in (say) 3 steps by differnt actors: 1 - 10% of 30= 3 The manufacturer buys the raw material, pays the VAT to the supplier that (hypothetically) has no preceding VAT costs and thus must give to the government the whole 3 € 2 - 22% of 80= 17,60-3= 14,60 then he does something with it and resells the product for 80 (i.e. it adds value, reselling it for 80 + VAT to a shop) and has to give to the government the differnece 3- 22% of 100=22-17,60=4,40 the shop sells the item to a consumer and has to give to the government the difference The government gets 3+14.60+4.40=22 € The final user has paid 22 € The incremental collection method allows to have the tax largely paid in advance, but the amount at the end comes out of the final user pocket. The Wikipedia has it very clear: https://en.wikipedia.org/wiki/Value-added_tax https://en.wikipedia.org/wiki/Value-added_tax https://en.wikipedia.org/wiki/Value-added_tax#With_a_value-added_tax https://en.wikipedia.org/wiki/Value-added_tax#With_a_value-a... https://upload.wikimedia.org/wikipedia/commons/2/28/VAT3b22.png https://upload.wikimedia.org/wikipedia/commons/2/28/VAT3b22....