Value-added tax or VAT is a tax that is applied on each stage of the supply chain from buying raw material to retailer to consumer. The important concept to understand here is that the VAT is applied on gross margin to any party involved in the supply chain. Unlike sales tax which is applied and paid on the total cost of the product by the consumer.
The working mechanism starts when a manufacturer buys raw material from a supplier and pays a value-added tax $5 for example 10% of the cost of raw material $50. At the time manufacturer sells the product to retailer the manufacturer charges 10% VAT on a sale price $12.5 being 10% of $125. This way, the manufacturer will pay only $75 to the government ($125- $50). The same process will be revised for a retailer and ultimately till the consumer pays last of VAT.
Contrast a value added tax (VAT) with a national sales
The United States Office of Management and Budget (OMB) provides
Chang Corporation is part of a three-corporation unitary business.
Regarding the value added tax (VAT), comment on the following
Both a value added tax (VAT) and a national sales
An entity incurs the following costs in connection with the purchase of
Assume the same facts as in Question 4(b) but
The following list of balances has been extracted from the records of
All of the following are characteristics of a value added tax system
The Cirrus Co. Plc has the following balances on its books
