The meaning of VAT

    I think many have to deal with customers with the question - “Do you work with VAT or without VAT?”. I will try to briefly explain what the essence of this issue is and what is the essence of the value added tax itself. Understanding this will give you an advantage over your competitors who answer without hesitation.

    Without further ado, right to the point. Examples are given taking into account that both seller and buyer work with VAT.

    Pay attention to how tax is allocated in bills, invoices, acts, etc. Example:
    Total: 100 rub.
    VAT (18%) 18 rub.
    Total with VAT: 118 rub.

    Conclusion 1: From the amount billed to the client, you owe the state tax according to the formula (Amount_to_payment / 118) * 18.

    VAT == Value Added Tax. This tax, in fact, is a trade tax - i.e. for those who buy and resell at a premium. This is regulated by the following method: if you bought something, then having allocated the amount of VAT from the purchase amount, you can take it “to offset”: reduce the tax payable by this amount.

    Example: Bought a battery for 50r. sold for 100r - pay the state 9r. tax (18% from 50 rubles. margins). In life, according to the documents, it will be like this: you will pay the supplier 59r for the battery. (50r + 9r. Tax, which we take to offset), sell it to the client for 118r. (100r + 18r. Tax), 18-9 = 9r. pay to the budget.

    Conclusion 2: From the purchased goods, services, the state should return the money to you according to the same formula (Amount_to_payment / 118) * 18.

    Yes, if you only bought and did not sell, the state will really return this money to you. Only it does it reluctantly, anticipating the payment of a couple of tax audits.

    If you produce goods, rather than trade them, nothing changes. You take into account the VAT from the purchased materials and purchased services for their conversion into a product (which in total is the cost) and, in essence, pay 18% just from your mark-up. And if the conversion of materials into a product is carried out by your employees, then you are out of luck - you can’t allocate VAT for wages. If your suppliers of materials work without VAT, then you are also unlucky - from such expenses it is also impossible to accept VAT for offset. The fact that you cannot allocate VAT from certain expenses and take it into credit does not relieve you of the obligation to fully allocate it when selling and pay to the budget.

    Conclusion 3: If you work with VAT, then you just need your suppliers to work with VAT too.

    In other words, if two suppliers offer you goods at the same price, while one of them works with VAT, and the second does not, then the first is obviously 18% more profitable for you. If you work with VAT, then when making decisions, consider prices cleared of VAT.

    Conclusion 4: If you work without VAT, then give customers prices 18% lower than the competitor working with VAT to be equal.

    ps C on the other hand, it’s generally funny. The vast majority of companies in all their calculations operate on prices without VAT and levy tax on top of the sale. In the end, goods, services, products are bought by ordinary people. Individuals are not VAT payers and cannot take VAT off (by reducing personal income tax, for example). Here the chain closes.

    pps Tip: work without VAT - use USNO.

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