VAT is a value added tax that is included in the price of the goods. In practice, it looks like this: when a buyer pays for a product, he pays for both the product and VAT. The seller keeps the money for the goods for himself, and gives the amount of value added tax to the state.
VAT has penetrated into the daily life of both the seller and the buyer so much that we practically do not notice it. Of course, until such time as we come across financial statements, one cannot do without VAT calculation skills.
How VAT appeared
The exact date of the appearance of taxes (in the general meaning of this concept), unfortunately, is unknown. We can assume that taxes came along with the advent of the concept of the state. Here the principle is simple: a person works and is not afraid for the safety of his property, family and craft - this is guaranteed to him by the state. But you have to pay for this service, and this is where taxes come in.
One of the most common crafts of all times and peoples was trade. Naturally, the state always wanted to have its share of this profitable business. But merchants are savvy people, which is why most of the trade transactions took place where the state eye does not see. Something had to be done about this. The first thing that came to mind was to shift the tax burden from the seller to the consumer. Taking taxes from this category of the population is much easier.
The first prerequisites for the emergence of VAT in the form that we know now appeared in Germany. The year was 1919, not a very favorable time for the German industrialist Wilhelm von Siemens. He had just suffered huge losses and hatched a cunning plan to pass all the financial costs on to an unprotected buyer. This is how the VAT project was born, which, by the way, Siemens did not have time to implement - the rich industrialist was gone. But his work, as they say, continued.
The French financier Maurice Loret revived the idea of value added tax. In 1954, he reminded his government that there was no need to "reinvent the wheel" and that one could simply use the idea of Siemens, according to which every thing sold in the state could be taxed, and not the seller, but the buyer would actually pay.
The idea was received with enthusiasm, but the pragmatic government of France approached it rather cautiously: initially, the practice of introducing VAT was implemented in one of the French colonies — Côte d'Ivoire. And after the positive result of the experiment, VAT was launched in France itself.
Studying the experience of neighbors, including in tax collection, neighbors followed France, and by our time, the value-added tax collection scheme has already taken root in 137 countries of the world.
Interesting facts
- Some countries, such as Canada and the United States, do not have VAT, but almost all have a sales tax. Arab countries with rich natural resources also cope without VAT: Oman, Kuwait, Bahrain, Qatar.
- In Germany, an analogue of VAT was introduced in Saxony in the 18th century.
- Highest VAT: Hungary, Denmark, Norway, Sweden and Iceland (ranging from 24.5% to 27%).
- Lowest VAT: in Jersey, Malaysia, Singapore, Panama and the Dominican Republic (from 3% to 6%)
- Some analysts consider VAT to be some element of a "global conspiracy".
- In some countries (there are more than 50 of them), there is a tax free system - VAT refund when buying goods in a specialized store. The system is valid for non-residents, a refund can be received when leaving the country.
- In many countries, VAT is a backbone for the state budget. For example, tax revenues in France account for more than 46% of the country's total GDP. A significant part of this amount is realized through value added tax.
The active distribution of value added tax across the countries of our planet is evidence that the system is recognized as effective. It is far from always that we can judge the economic well-being of the state by the amount of VAT, but there is definitely a certain meaning in the approved VAT rate.
