What People should Know about Value-Added Tax
Several countries use value-added tax among other sources to raise the required income. Most countries have realized value-added tax to be efficient in collecting government revenue. The fact that value-added tax is imposed on goods makes it difficult for people to evade. The tax has led to development projects conducted by government. Leaders within countries get to use the money to develop areas that are less advantaged. People who are in areas where the governments contact the development activities can be able to secure employment. The value-added tax has been a good way for countries to distribute income among the rich and the poor.
Consumers pay a tax equivalent to the number of goods they choose to acquire. People can be able to avoid paying the tax by avoiding a given product. There is no much effort required by the tax authorities to collect the value-added tax. Value added tax provides a continuous source of income for governments. Different countries charge different rates for the value-added tax. There are some products which are exempted from the tax. The leadership within countries can use value-added tax to control the sale of given categories of products. Some goods which government needs to discourage people from using can have high tax rates.
Value added tax is said to be neutral as it’s imposed in all types of businesses. Businesses can achieve several benefits by being VAT registered. Businesses are given VAT number. The registration number can be displayed in most documents. The numbers can be indicated on websites and furniture. Businesses appear to be professional in the activities. Organizations appear to be trustworthy to their market. Business organizations get to retain most of their customers.
Businesses have the option of claiming a value-added tax refund. Businesses can claim for a VAT refund on products they purchased in the past but are still in use. Organizations can have a large amount to claim for the value-added tax if they have invested in purchasing high-value equipment. Businesses are perceived to be large even when they are small. This can impress existing and potential customers enabling the businesses to create a large customer base. Organizations can improve their income levels with VAT registration to increase their client base. The need to expand business operations can be achieved with increased income levels due to a large number of clients.
The step by businesses to register for VAT can serve to improve their reputation in the industry of operation. The enhanced reputation of the companies can help to improve their competitive power in the industry. Reputable companies are a preference for most customers. Businesses might be required to produce VAT registration to some given transactions.