4 ms·
the VAT reference is that businesses don't pay VAT, only end consumers do. If you buy something and then integrate it into another product, then re-sell it you
by rtpg 5y ago
the VAT reference is that businesses don't pay VAT, only end consumers do. If you buy something and then integrate it into another product, then re-sell it you are exempt from VAT (details are more complicated, but it's _not_ like sales tax)
- deleted 5y ago[deleted]
- fsckboy 5y agoif you resell items, then you don't pay sales tax on them, so that part fits your description VAT is not a sales tax because it's an income tax. That's what value added means, profit, income, the measure of the value you've added. Wether it gets hidden in the price or tacked on to a fake price makes little difference.
- rtpg 5y agoMy understanding (based off a French accounting class from many many years ago) is that VAT also can be deducted for things like factory equipment or, say, desks for your office workers. It's not purely a "if it's for resale you don't pay sales tax" thing, but a "if this is used for business then you can get a deduction for your VAT" (with some exceptions). I would not really describe VAT as an income tax. It's not a tax on an income, it's a tax on the value add. Income tax means something specific, and perhaps VAT is one degree away from that, but money is fungible! On a long enough time scale everything is inheritence tax and income tax I guess! EDIT: rereading my original post at the start of this thread I now feel a bit silly saying the explanation is "VAT-like". Metaphors and similes are bad!