3 ms·

The subsidy is that the small business didn’t have to pay vat while still being able to attach a you-get-a-refund-from-the-government voucher to its invoices.

chongli 3y ago
You wrote: If you’re a small business, you don’t pay VAT for the invoices you wrote, and your business customers cannot deduct any VAT when they buy from you. How can you attach a "you-get-a-refund-from-the-government" voucher to your invoices if your customers cannot deduct VAT when they buy from you?
- konschubert 3y ago
  You they could, previously, in Japan.
- sangnoir 3y ago
  > How can you attach a "you-get-a-refund-from-the-government" voucher to your invoices if your customers cannot deduct VAT when they buy from you? (Not parent) In Germany, you can't. In Japan, you could, but that's what's changing.
Detrytus 3y ago
That is weird. The way it is supposed to work (in my country at least) is: If a company is registered for VAT they will charge you X net price + Y amount of VAT for their items. If a buyer is also a VAT-registered company they subtract Y from the amount of VAT they owe (so it is a tax credit). If you buy from a small company, not registered for VAT, you only pay X, because the seller is not subject to VAT, so they do not have to add it. So, you only pay X, and the fact that you can't subtract Y from the amount of VAT you owe is irrelevant. So, the small companies have a competitive advantage of not having to add 20+% of VAT to their prices.
- konschubert 3y ago
  Yes. And it seems that in Japan, the customers of the small company only had to pay X, but still could subtract Y from their own VAT payments! So the price of the small business was effectively X - Y. Which is what I would call a subsidy. And a bad subsidy, because it suddenly cuts off at a certain value, discouraging organic growth.

3 ms·

The subsidy is that the small business didn’t have to pay vat while still being able to attach a you-get-a-refund-from-the-government voucher to its invoices.

by konschubert 3y ago

chongli 3y ago
You wrote: If you’re a small business, you don’t pay VAT for the invoices you wrote, and your business customers cannot deduct any VAT when they buy from you. How can you attach a "you-get-a-refund-from-the-government" voucher to your invoices if your customers cannot deduct VAT when they buy from you?
- konschubert 3y ago
  You they could, previously, in Japan.
- sangnoir 3y ago
  > How can you attach a "you-get-a-refund-from-the-government" voucher to your invoices if your customers cannot deduct VAT when they buy from you? (Not parent) In Germany, you can't. In Japan, you could, but that's what's changing.
Detrytus 3y ago
That is weird. The way it is supposed to work (in my country at least) is: If a company is registered for VAT they will charge you X net price + Y amount of VAT for their items. If a buyer is also a VAT-registered company they subtract Y from the amount of VAT they owe (so it is a tax credit). If you buy from a small company, not registered for VAT, you only pay X, because the seller is not subject to VAT, so they do not have to add it. So, you only pay X, and the fact that you can't subtract Y from the amount of VAT you owe is irrelevant. So, the small companies have a competitive advantage of not having to add 20+% of VAT to their prices.
- konschubert 3y ago
  Yes. And it seems that in Japan, the customers of the small company only had to pay X, but still could subtract Y from their own VAT payments! So the price of the small business was effectively X - Y. Which is what I would call a subsidy. And a bad subsidy, because it suddenly cuts off at a certain value, discouraging organic growth.