Difference between revisions of "Value Added Tax"

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m (punctuation)
(I removed line about VAT subsidy. It is factually incorrect.)
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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.
 
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.
 
  
 
==See Also==
 
==See Also==
  
 
[[Taxation]]
 
[[Taxation]]

Revision as of 18:01, 2 May 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.


See Also

Taxation