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> VAT is only paid once by consumers for products, advertising is a company expense that simply shifts the VAT one level down the chain. It doesn't get applied
by MarkMc 9y ago
> VAT is only paid once by consumers for products, advertising is a company expense that simply shifts the VAT one level down the chain. It doesn't get applied at every level on the supply chain, it gets passed down.
That's one way to look at it. Another way is to see it as a tax paid by each supplier based on how much value that supplier has added to the supply chain - a sort of 'value added' tax, if you will.
> So if Amy's Amazing Tours sells a £100000 tour round London, without any advertising, it generates £20000 VAT paid by Amy.
> If the same tour is sold by Mike, for the same price of a 100k, but with £50000 worth of Google adverts, Mike pays only £10000 VAT with Google paying £10000 too. Still adds up to £20000.
In this example Amy contributes £100k in value, Mike contributes £50k in value and Google contributes £50k in value. Essentially Google has allowed the UK government to collect the same amount of tax even though Mike has produced only half as much value as Amy. Isn't that nice?
- mattmanser 9y agoWay to move the goal posts. Regardless, you still don't understand VAT. The consumer pays VAT, not the business. It just happens to be collected by the business. VAT is not charged on exports. It's a consumption tax levied on individuals, not a tax levied on business profits. Google generates nothing as the money would simply be spent on something else. So I pay VAT, you pay VAT, companies do not pay VAT, they merely collect it.
- MarkMc 9y agoOK fine - the consumer pays VAT. In that case I would say that Google performs a certain amount of work and as a result consumers end up paying more VAT. I'm pretty sure that if Google stopped displaying ads in the UK then the total VAT collected by the UK government would shrink.