Value Added Tax (VAT)

Definition of VAT - One of the indirect taxes, which are easily receivable, and achieve high productivity, and do not cause reactions with taxpayer, which is imposed on the basis of expenditure on goods and services and in all stages of production, sale or distribution and final consumer. And called by that name because it impose on a value- added (the value-added is the value which added to the value of the product after each stage of the production and sale…..) -Or the total value of sales after deducting the purchases for the same period (on the cross profit of the business).

Characteristics of value-added tax 1 - an indirect tax: Where the final consumer bears the burden of tax, therefore differ from the direct taxes, that taxpayer is the one who bears the burden of the tax and cannot pass the burden to another person like: Income taxes, Salaries Tax. 2 - monthly tax : Where the taxpayer is committed to supply VAT to the Tax Department, accompanied by periodic statements.

Characteristics of value-added tax 3- the value of tax: Where imposed on the value of the goods or service regardless of the type of goods or services, it imposes a certain percentage of the value of goods and services. 4-Tax rate of 14.5%: As defined by law, the rate is 14.5% of the value of goods and services. 5 - regional tax (Local):

Characteristics of value-added tax 6- interim collection tax: it mean that the tax did not receive one-time or during a certain stage, but receive the tax at each stage of the production. 7 - VAT is not considered an element of cost. Because can this tax deduction of the tax due on the sales.

Key words for VAT: - Base (Basic Value)  the price before tax - Tax (Tax value )  that is percent of base value. - Total  price + tax. - VAT calculation Tax = base * tax percent Total = base + tax value Total = base * (1 + tax percent) Base = Total (1 + tax percent) (1 + tax percent)

Who is a taxable person (Taxpayer)? For VAT purposes, a taxable person is any individual, partnership, company or whatever which supplies taxable goods and services in the field of business.

How is it charged? final price of the product is equal to the sum of the values added at each preceding stage, the final VAT paid is made up of the sum of the VAT paid at each stage.

To illustration the concept of value-added: To illustration the concept of value-added: 1 - Suppose that a brick factory produces one of brick package cost of 100 shekels, and when sold by the manufacturer to the wholesaler with profit rate equal 10%, and after the addition of value-added tax rate of 14.5%, the value of the tax will be and the cost of the product by the wholesaler equal shekels. 2-If we assume that the wholesaler is a profit percentage of 10% of the cost before the tax is that he will collect the wholesaler from the retailer under the name of VAT.

3- If we assume that the retailer is a profit percentage of 10% as well as the values of VAT equal shekels which will be paid by the consumer. If the ratio of profit and the retailer, as we said, 10% so, the consumer will pay the price of 138,545 shekels for a commodity. And the conclusion that the price of this commodity instead of shekels would be an increase NIS is the sum of value added tax which means that only the consumer who will pay all these taxes.

- Net amount = price before VAT - Gross amount = price after VAT - VAT amount = net amount × VAT percent - Gross amount = net amount + VAT amount - Or Gross amount = net amount × (1 + rate of VAT) - Net amount = gross amount (1 + rate of VAT) (1 + rate of VAT) More Description for VAT Key words:

- Net amount= quantity × price pre unit (vat not included) Gross amount = quantity × price per unit (vat included) - VAT tax payable = VAT collected on sales - VAT paid on purchases More Description for VAT Key words: