VAT Revision and expansion

Complete the following: VAT is levied at each stage of the ____________ and _________ process. Taxable persons are individuals and __________ engaged in _______ activities. The standard VAT rate in Croatia is ______. The zero rate applies to _______________.

VAT is levied at each stage of the PRODUCTION and DISTRIBUTION process. Taxable persons are individuals and LEGAL ENTITIES engaged in TAXABLE activities. The standard VAT rate in Croatia is 25%. The zero rate applies to BREAD AND MILK, BOOKS, SCIENTIFIC JOURNALS AND MEDICINES.

Translate the following words and phrases: Trade union Chamber of commerce Unfair competition Supply of services for consideration Entertainment expenses Exemptions VAT refund

Trade union - sindikat Chamber of commerce – Gospodarska komora Unfair competition – nepoštena konkurencija/tržišno nadmetanje Supply of services for consideration – obavljanje usluga uz naknadu Entertainment expenses – troškovi reprezentacije Exemptions - oslobađanje VAT refund – povrat poreza na dodanu vrjiednost

Complete the following: Added value is the value of what the _____________ has added to the inputs before they are sold as new ___________ and ____________

Added value is the value of what the producer has added to the inputs before they are sold as new products and services

Translate into English: Porez na potrošnju Vlastita potrošnja Isporuka dobara Inozemni poduzetnik Oporezivi iznos Nerezident

Porez na potrošnju – consumption tax Vlastita potrošnja – personal consumption Isporuka dobara – supply of goods Inozemni poduzetnik – foreign entrepreneur Oporezivi iznos – taxable amount Nerezident – non-resident

VAT in EU The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services.

Application VAT applies more or less to all goods and services that are bought and sold for use or consumption in the Community.

A general tax VAT is a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services.

Consumption tax  VAT is a consumption tax because it is borne ultimately by the final consumer. It is not a charge on businesses.

Percentage of price  VAT is charged as a percentage of price, which means that the actual tax burden is visible at each stage in the production and distribution chain.

Neutral tax  VAT is collected fractionally, via a system of partial payments whereby taxable persons (i.e., VAT-registered businesses) deduct from the VAT they have collected the amount of tax they have paid to other taxable persons on purchases for their business activities. This mechanism ensures that the tax is neutral regardless of how many transactions are involved.

Indirect tax  VAT is paid to the revenue authorities by the seller of the goods, who is the "taxable person", but it is actually paid by the buyer to the seller as part of the price. It is thus an indirect tax.

A taxable person For VAT purposes, a taxable person is any individual, partnership, company or whatever which supplies taxable goods and services in the course of business. However, if the annual turnover of this person is less than a certain limit (the threshold), which differs according to the Member State, the person does not have to charge VAT on their sales.

Reading exercise Read the text Happy birthday VAT – here’s how not to pay you (handout)

Comprehension Check How many countries have a VAT system today? Who invented VAT? What is the standard VAT rate in the UK? What does it apply to? What was the standard VAT rate in the UK in 1973? What is the share of VAT in the total UK revenue? Which products are zero-rated for VAT purposes?

How do you explain the statement that „in the world of VAT… factual and legal realities are suspended and inverted”?

Vocabulary An eightfold increase – osmostruko povećanje The Common Market – zajedničko EU tržište Smoking cessation products – proizvodi za prestanak pušenja Poultry - perad Cremation services – usluge kremiranja

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