value added tax

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value added tax (VAT)

a tax on consumer expenditure collected on business transactions, imports from outside the EU and acquisitions from other EU countries. All EU countries apply VAT in accordance with the Sixth Directive. Many non-EU countries have adopted a tax very similar to VAT, e.g. Mexico, Russia, New Zealand and Australia. The UK law is based upon the Value Added Tax Act 1994, statutory instruments made under that Act and parts of certain VAT notices published by HM Revenue & Customs which are law because of powers given by statutory instrument. The main charge to VAT applies where there is a supply of goods or services in the UK, or the Isle of Man, by a taxable person in the course or furtherance of business and the supply is not specifically exempted. A taxable person is any individual, partnership, company or other entity which is registered for VAT, or ought to be registered because of making taxable supplies above certain value limits. A person who makes taxable supplies below these limits can register voluntarily in order to recover VAT incurred on purchases of goods and services (inputs) related to making those taxable supplies.

There are three rates of VAT: a standard rate, a reduced rate and a zero rate. There is a fundamental distinction between zero-rating and exemption because a business making zero-rated supplies can recover all the related INPUT TAX whereas the VAT incurred on goods and services acquired in order to make exempt supplies cannot be recovered and forms an additional cost to that business. Even businesses which could otherwise reclaim VAT on their inputs cannot normally do so in respect of cars and business entertainment. All taxable persons must keep and preserve records and accounts of all taxable goods and services which they receive or supply in the course of their business, as well as records of any exempt supplies that they make. Such records must normally be kept for six years. There are a range of financial penalties and interest charges to encourage people to register for VAT on time, to send in accurate VAT returns and to make payments on time.

References in periodicals archive ?
TMM and KCS believe that the audit findings by the SAT and the continued attachment of the original value added tax certificate lack any legal merit, and they expect TFM to contest through appropriate legal means the conclusions of this tax audit and any penalties or taxes that may subsequently be assessed.
The GST on the other hand, is a value added tax, which will replace all indirect taxes levied on goods and services by the Central and State governments.
The corporate tax rates have been steadily falling for a decade, whilst value added tax and goods and services tax (VAT/GST) systems have been introduced across the globe, rising to higher rates and applying to more items as indirect tax systems mature.
But all the performance of the govt will go in vain if the Value Added Tax is imposed on the wheat or its products, because following the imposition the flour will be available in retail market for not less than Rs 35 per kg.
ISLAMABAD, May 30 -- The Federal Board of Revenue (FBR) has enhanced considerably the documentation requirements for the registered taxpayers under the proposed Value Added Tax (VAT) regime to be enforced from July 1, 2010, official sources informed Daily Times on Saturday.
The introduction of value added tax, expected as early as 2012, could earn the UAE government $1.
CANKIRI, Mar 25, 2009 (TUR) -- Premier Recep Tayyip Erdogan announced Wednesday a series of new economic measures foreseing cuts in Value Added Tax for real estate and various other products, during an election rally of Justice and Development (AK) Party in Cankiri.
The Indian government has announced an across the range reduction in the central value added tax rate on all products other than petroleum and products where the rate was already less than four percent.
Estimates are that the UAE value added tax will be upwards of 5 per cent replacing custom duties though the net impact in terms of whether an increase in tax burden will materialise remains unclear.
today announces the launch of its Vertex Value Added Tax O Series product in Europe.
On 11 May 2006, the Directorate-General Taxation and Customs Union of the European Commission released a Consultation Paper on modernising Value Added Tax obligations for financial services and insurances.
1 now incorporates reporting functionality for Value Added Tax (VAT) returns for 10 European countries--Austria, Belgium, France, Germany, Ireland, Italy, Luxembourg, Portugal, Spain and the United Kingdom--representing more than 80.

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