Supply of Goods
As a consumption tax, the general rule is that the VAT is ultimately collected where the goods are purchased by the consumer. The supply of goods (the exchange of goods for consideration) is a taxable transaction, that is, VAT at the appropriate rate is added to the purchase price. If the purchaser is a business (a taxable person) that is not the final consumer, it may reclaim as a credit the VAT paid on the purchase. When the business resells the goods, VAT is added to the resale price. The taxable person then pays to the government the VAT on the resale, less a credit for the VAT on the purchase, and in effect thus pays to the government tax on the value added. The supply of goods follows a chain of businesses until it reaches the final consumer. The final consumer does not receive a credit for the VAT paid so that the final consumer bears the cost of the VAT.
Read more about this topic: European Union Value Added Tax
Famous quotes containing the words supply of, supply and/or goods:
“I think it’s a question which particularly arises over women writers: whether it’s better to have a happy life or a good supply of tragic plots.”
—Wendy Cope (b. 1945)
“With girls, everything looks great on the surface. But beware of drawers that won’t open. They contain a three-month supply of dirty underwear, unwashed hose, and rubber bands with blobs of hair in them.”
—Erma Bombeck (20th century)
“He was a laborer. Sweated his goods out for nine pound a week. He never had it so good.”
—Alan Sillitoe (b. 1928)