What Is VAT: the Basics of Accounting Certificates

What is VAT? the VAT is perhaps the most popular tax among all available. It is paid by all organizations working on common taxation regime.  About him, on the one hand, they know everything. On the other hand, this knowledge is usually so shallow that many people think that VAT – that is simply adding 18 percent to the cost of goods or services.

The Simple tax does not exist. Characteristics of VAT shows that This tax has a rather complex structure, as some companies are exempt from paying it, some receive certain benefits. It is therefore important to know the nuances of that to correctly calculate the VAT and not lose their own money for lack of knowledge in this field. We are talking about an elementary fines.

What is VAT? General concepts

Value added Tax Is an indirect tax that is an extra price item. It is a form of withdrawal of the value added to the state budget. VAT is defined as the difference of the value  of goods sold (services) and costs of material costs of production and circulation.

This tax has a direct impact not pricing, consumption patterns, regulates the demand. In fact, VAT is one of the most powerful fiscal instruments of the state.

In Russia, VAT has been operating since 1992. Now the procedure of VAT calculation and payment thereof is governed by Chapter 21 of the RF Tax code.

Starting 1st of January 2004, the VAT is 18%.

VAT act enterprises and individual entrepreneurs, physical persons who transport across the border goods. Exempt from VAT organizations and entrepreneurs who work on special tax regimes. So be aware of what a VAT is necessary and legal, and physical persons.

There is a possibility to exempt from VAT even if you are working on a General regime (article 145 of the Tax code). According to him, the VAT can not pay the company, whose revenues for the last three months did not exceed 2 million rubles. To release you need to contact the tax office.

Objects of the VAT perform operations sale of products (services) and transfer of property rights. In addition, objects are and transfer operations (including grant) of goods, services, construction and installation work for own consumption, and imported on the territory of Russia products.

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About 70 types of transactions under article 149 and 150 of the tax code exempt from VAT, as listed in article 146, paragraph 3 transactions not subject to VAT at all.

To understand what is VAT and how to calculate it, you need to learn a lot of regulatory documents.

Tax base – this is the amount at which the tax is calculated. She is determined  (articles 153-162 of the tax code) depending on the kind of traded goods. If you implement a taxpayer apply different tax rate, the tax base is calculated separately for each type of goods (works, services), assessed under types of bets. If you apply the same rate, the tax base is considered to be total for all types of operations taxed at this rate. In some cases, the tax Inspectorate requested clarification on VAT, if there is a variety of rates and objects of taxation.

The Obligation to pay VAT occurs the day of payment or shipment (including partial) of goods (services).

The tax is Paid quarterly. From the amount of tax deductions made. If they exceed the amount of VAT payable, the difference shall be reimbursed.

The VAT Rates are: 0%, 10% and 18%. A list of products at reduced rates given in article 164 of the tax code.

The Taxation at a zero rate for the company is more profitable than exemption from VAT. In this case, you can recover VAT on purchased goods.

The amount of VAT paid when purchasing goods (works, services) on the territory of the Russian Federation, shall be deducted from the amounts of goods sold. In this regard, organizations that pay VAT, not working with enterprises engaged in other tax regimes.

Thus, to understand what a VAT is getting a bit easier. In practice, this tax is very similar to the sales tax: each seller puts in issue these accounts this tax. The buyer can deduct this tax from the paid for goods (services) amounts. As a result, the VAT actually lies not on sellers of goods and their final retail customers.  This system allows to avoid paying tax on tax. Will be charged the same VAT actually only at the time of entering the goods into the hands of the end user.