4 ms·
VAT is not a 20% sales tax; it's a 20% tax over the profit the seller has over the final customer. If a seller has a 40% profit margin on a product then he pays
by Daishiman 13y ago
VAT is not a 20% sales tax; it's a 20% tax over the profit the seller has over the final customer. If a seller has a 40% profit margin on a product then he pays taxes over that, not the entire cost of whatever he's selling.
- Luc 13y agoIt's the customer who pays VAT. Businesses don't pay VAT, they only collect it for the tax man (and in cases where they have paid it, they claim it back).
- taejo 13y agoVAT and sales tax have the same effect. https://en.wikipedia.org/wiki/VAT#Comparison_with_sales_tax https://en.wikipedia.org/wiki/VAT#Comparison_with_sales_tax