VAT (Value Added Tax) is a sales tax levied on the sale of goods and services. In some countries, including Singapore, Australia, New Zealand and Canada this tax is known as "goods and services tax" or GST. VAT is an indirect tax, in that the tax is collected from someone other than the person who actually bears the cost of the tax.
VAT was invented by Maurice Lauré, joint director of the French tax authority, the Direction générale des impôts, as taxe sur la valeur ajoutée (TVA in French) in the 1950.
A consumption-based tax system has attracted the Globe and has created a variety of supporters, including proponents of tax simplification and policy makers in search of finding an alternative source of revenue. Such a system involves the use of a value-added tax (VAT). Policy makers and legislators should consider development of sales tax as a background for the problems that might be encountered in adopting VAT.
World Bank has suggested value-added tax (VAT) regime as a replacement of the existing sales tax system and will be introduced on the basis of floor rates rather than uniform rates to avoid loss of revenue, preserve tax autonomy and minimize the need for compensation. Value Added Tax or VAT is a national sales tax on goods and services, which is levied by many countries around the world.
The World Bank has suggested with regard to India that the strategy of rate harmonization would promote simplicity in the tax regime but may not be worth the cost in terms of loss of state tax autonomy and tax revenue keeping in view the tax/GDP ratio needs to be increased. The report has also suggested that individual states could be encouraged or at least allowed to graduate individually into VAT if a consensus cannot be established to guide the introduction of VAT.
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VAT Rates in the participating countries generally range from 6.5% to 25% depending on the country. VAT may be refunded on: hotels, restaurants, car rentals, parking, gasoline, diesel fuel, transportation within country, business entertainment, telecommunications, conferences, trade shows, training courses, professional fees. Certain VAT is not refundable such as on alcohol and laundry services.
A Value Added Tax is a tax that is charged at each level of the manufacturing process was considered as a hybrid tax initially because of complexity. It was also supposed that it will encourage saving and reduce consumption.
Today around 135 countries utilize value added tax (VAT) while a number of countries adopt sales tax. Almost all countries of the world rely upon taxes as the major source of revenue.
Vat in global environment conference
VAT and Inflation
Vat in European Union Countries
Features of EU tax systems
CHANGES IN EU TAX SYSTEM
Reforming the VAT in EU
Taxation in the United States
VAT Rates In Non-EU Countries
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