Basic Features Of VAT Part Two

Neutrality via the net all-phase principle with input tax deduction

The common VAT system is based on the following principle: Each taxable company in the supply chain calculates the sales tax based on the consideration it receives from its respective customer at the tax rate applicable to the delivery or service provided. At the same time, it determines the previous sales that it used to carry out its deliveries and provision of its services, and the sales tax that was billed to it for this. It deducts this sales tax from its tax liability as input tax. The difference is paid as a payment burden to the tax office. The common VAT system is applied up to the retail level. The subjective right to deduct input tax must be assessed individually at all levels along the service chain. The person who is economically burdened by VAT (taxpayer) is the end consumer. The burden on final consumption is achieved by eliminating the input tax deduction at the enduser level. The