What is VAT?
Value added tax is known as General sales tax in some countries. The taxes are charges directly or indirectly. These taxes are charged as indirect taxes on the consumption of goods and services used in different countries. It is value based tax. When there is, some value is added in the purchase then these taxes are charged accordingly or proportionally. The implementation of these taxes is made just as a destination base tax. These taxes are added on each stages of production to finish goods. These taxes varied on the basis of goods are finally supplied.
Does Every Business Need VAT Services?
The world is familiar with Value added tax. This tax is imposed on all the goods and services produced or delivered in a country. The business organization has to be registered under tax body to make their operations legal. Otherwise there may be restriction. Value added tax applies on both type of customers those who are business customers and those who are not business customers. In category of Business customers, value added tax will charge to the store where the manufacturer will send the product to sell out. Secondly it will be charge to the end user at the final purchase of the product. There is a registration require for the VAT service. This tax is included in the goods and services. The business organization which are registered by the VAT service can reclaim the paid charges but those which are not registered, they cannot reclaim. Here are the few situations when the businesses have not to pay for VAT services.
• Free Goods:
If a business gives something to someone else and value of the gift is less than fifty dollars then no value-added tax will be charged. The purpose to give free goods as gift, is to promote your business and make the prospect your client or customer in near future.
• Free samples:
There are many situations when the customer requires some products as sample to test the quality of the products which the business intend to sell him or her in future. The quality is check there. On these sample goods, there are no taxes charged in form of value added tax.
• Free services:
If you are providing services for free or not charging fee, then there will be no charges at the use of these services will be paid. These free services may be in result of some social welfare or as a charity.