Quote:
Originally Posted by Little.Egret
That answer gets you a failing grade (except that US business schools teach VAT so badly they might not notice).
It's registered businesses that can deduct VAT paid but must charge VAT to their customers (who may be other businesses). And some businesses like insurance companies can't do this - in VAT terminology they are "exempt".
And all the VAT on an export is refunded.
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And you are failing the English class for not being able to read what I said.
If one company charges another company, the VAT is deducted (surely, it is charged before deducted), but the second company transfer everything to the end customer (or a third company, in which case the second step is repeated). In other words, the end customer gets the product for its price (altered by successive
value increases ) plus VAT (which has been stepwise collected). VAT is fixed and depends on the country. In case you're thinking of the exact piece of coin, it's not, but that's not the issue. The mechanism of deduction is so implemented that one
does not pay VAT on VAT.
A ironical but sad aspect of this problem is that the VAT was invented (by France)
to tax businesses, yet it's exactly these the ones that escape this taxation and
pass everything onto the private customer.
Concerning the world without companies, well, think the world before 1600 (although companies have existed also in the Roman Empire and probably before it in the Middle East, as this wasn't a Roman thing).