Difference between revisions of "Value Added Tax"
From Conservapedia
(Not quite correct - a few changes.) |
m (punctuation) |
||
| Line 1: | Line 1: | ||
A '''Value Added Tax''' (VAT) is a national [[sales tax]] paid by companies based on the value they add to a [[product]] at various stages of production or [[distribution]]. | A '''Value Added Tax''' (VAT) is a national [[sales tax]] paid by companies based on the value they add to a [[product]] at various stages of production or [[distribution]]. | ||
| − | The tax is paid at each stage of production, but a credit is received for tax paid on inputs. For example, assuming a VAT rate of 10%, if a company sold | + | The tax is paid at each stage of production, but a credit is received for tax paid on inputs. For example, assuming a VAT rate of 10%, if a company sold its product for $100.00 and the cost of inputs to make that product were $80.00, they would have to pay $10.00 less an input credit of $8.00 to account for the VAT paid by their suppliers. |
It is controversial in [[global trade]] because many countries give domestic manufacturers rebates, or a [[VAT subsidy]], if they [[export]] those goods to other nations. | It is controversial in [[global trade]] because many countries give domestic manufacturers rebates, or a [[VAT subsidy]], if they [[export]] those goods to other nations. | ||
Revision as of 18:03, April 27, 2007
A Value Added Tax (VAT) is a national sales tax paid by companies based on the value they add to a product at various stages of production or distribution.
The tax is paid at each stage of production, but a credit is received for tax paid on inputs. For example, assuming a VAT rate of 10%, if a company sold its product for $100.00 and the cost of inputs to make that product were $80.00, they would have to pay $10.00 less an input credit of $8.00 to account for the VAT paid by their suppliers.
It is controversial in global trade because many countries give domestic manufacturers rebates, or a VAT subsidy, if they export those goods to other nations.
