Need expert info on VAT ?
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armand
Apprentice
Joined: 01 Mar 2005
Posts: 5
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 Posted: 02/16/08 - 07:27 Post subject: |
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| I recently started a small business and although it is going quite well, I’m very confused about one thing. I really cannot understand how VAT works, and why almost every country in the world has it. Things are already too expensive, even without VAT. And, what if I want to do business with some of my friends, do I have to charge VAT to them, also? I know I’m no expert, but, it is really necessary? |
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elyn
Apprentice
Joined: 24 Aug 2005
Posts: 3
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| Posted: 03/17/08 - 03:14 Post subject: |
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| VAT is an indirect tax charged to the final consumer. VAT is charged if a business transaction involves supplies of goods or services by a taxable person, if not exempt or zero rated. VAT rate can be standard, reduced or zero rate. It is possible that value of taxable supplies is under a specific limit, in which case there is no obligation to register for VAT. When the value of taxable supplies reaches the limit, you need to charge VAT and keep a record of all rated goods and have a VAT account. It is different form conventional sales tax because it represents a fraction of the price of each taxable sale you make. |
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