value added tax

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See: ad valorem

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 ?
Increasing the price of most goods and services by about 5% will act as a further disincentive to consumer spending so in the early days following the introduction of the new value added tax system it is likely that retailers may reduce their profit margins and absorb some or all of the VAT costs with a view to maintaining the sales volume required to sustain their businesses, he said.
The introduction of value added tax on plots is in compliance to European Union directives.
Value added tax law which according to the 85th paragraph of IRBL is passed from Islamic republic of Iran parliament economic commission in 7th may 2008.
Erdogan said they were lowering the value added tax over business offices, shops, stores and other commercial properties, from its current rate of 18 percent down to 8 percent for a period of three months, in order to boost the demand in the construction sector and help construction companies clear their stocks.
Since July 2000, the European Commission has been reviewing various proposals in the value added tax (VAT) area.
Members of Congress have expressed considerable interest in repealing both the individual and corporate income tax and replacing them with consumption taxes, such as a retail sales tax, a value added tax or a personal consumption tax.
For example, the value added tax (VAT) could be an indirect supplement to the already existing personal income and corporate tax structure, which would tax the value added onto an item during each individual stage of production.
Eklil Hakimi, Minister of Finance in a meeting with Mitsuji Suzuka, Ambassador of Japan to Afghanistan appreciated the assistances by this country to Afghanistan and discussed its technical and financial cooperation with Afghanistan, strengthening financial system, membership of Afghanistan in World Trade Organization (WTO) and its reform programs for modernizing Customs Department of Afghanistan, establishing working group to use Japans experience in tax administration, financial support of this country in value added tax, capacity building of Ministry of Finances staff in various fields specially public policy, administration, accounting and value added tax, providing long term and short term scholarship for Ministry of Finances staff and other interested issues.
The UAE Federal Tax Authority (FTA) has confirmed that all purchases made through online shopping portals are subject to the same 5 per cent Value Added Tax (VAT) as any other purchase made through traditional outlets if the products purchased online are received within the emirates, reported state news agency Wam.
by Staff Reporter A pact on value added tax (VAT) will be signed in the coming days.
Hosted at The Meydan Hotel on October 4, 2016, titled 'Let's Talk VAT' event provides companies in the GCC with a general understanding of Value Added Tax (VAT) and its likely impact on their businesses.
E&Y Qatar tax director Jennifer O Sullivan delivering a presentation on value added tax in the GCC.

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