VAT Tax - Theory of Levying Essay Example | Topics and Well Written Essays - 750 words

VAT Tax - Theory of Levying - Essay ExampleThe main(prenominal) advantage of VAT is the cascading type tax (CTT) the biggest limitation from a CTT to a VAT is the ability of an increase in inflation. A book, The Modern VAT was produce in 2001 by the International Monetary Fund and it defines VAT as A broad-based tax levied on commodity sales up to and including, at least, the manufacturing stage, with dictatorial offsetting of tax charged on commodities purchased as inputs -- except perhaps on capital goods -- against that due on outputs.India and the US, two of the worlds democracies, dont have VAT system because the nous behind the VAT is system is a tax to end all taxes, but other countries that have VAT dont levy entry or prodigality duty. If the prices of stock transfer goods increase then the impact of the VAT system would be, the Denial of tax credit in respect of inter- relegate stock transfers will detriment investment in less developed states or states with relatively small internal markets. Then every state political relation with the VAT system would have a draft law that wouldnt allow VAT already paid off elsewhere. Tax experts now state that the price of consumer goods is increasing by 15-20%.The ministry of finance and state admin of tax posted a notice about the increase on electronically products in 1998, which caused the VAT to increase from 9% to 11%. The VAT prise for textiles is 15%, for the sale/import of most goods is 17%, and 13% for vegetable oil, natural gas, and chemical fertilizer. An organization that makes taxable goods have 7% tax (inclusive of government taxes), this is the majority of businesses. Some goods have a 0% VAT, in this case the supplies does not collect the tax, but can put a recovery on its input tax. Some 0% VAT items areExported goodsServices provided in locally but used overseasServices of international transportation by air and sea. Ministry, Department, Local Government or public enterprises salesSale of goods and services to the United Nation Sale of goods and services from one warehouse or enterprise to another. The taxpayers net tax is calculated and the beginning of each month that credits the amount of VAT paid on inventories, capital goods or sensible materials that were for sale or in the process of consumption during the on the versus the total amount of VAT due on for the goods or services in the homogeneous months. (Input Tax vs. Output Tax). What are VAT exemptionsThere are 10 categories that are excluded of the VAT tax, but keep in mind that a trader under any of these exemptions cant use input tax credits. Some exemptions are as follows small entrepreneurs, unprocessed farm products (fertilizer, pesticides etc), newspapers, magazines, textbooks, domestic and international transport, health and educational and medical services, libraries and museum services, religious services and charityTax InvoiceThe VAT-payers have to issue tax invoices to show the details of the value of goods sold. An invoice is necessary because it is severalise of input tax for the taxpayers that buy goods. A tax invoice consists ofAn obvious mention of TAX INVOICE on the paperthe name, address, and tax identification number of the issuerand the purchaser The series numbers of the tax invoice and the tax invoice bookthe type, category, quantity, and value of the goods or serv