This is definitely a deviation from the main thread, but it is nevertheless interesting.
How does it work if a business buys parts to build a product, then that product is sold to another business which then incorporates several products to produce one end product that is ultimately sold to the customer.
Would the tax be collected at any of the intermediate steps? I'm assuming yes - else it would not be called "value added"... This seems to be a bad idea as compared to a national sales tax, where the product or service is only taxed once - at the end user level.
It strikes me that a VAT could drastically increase the cost of some items - particularly those where there are sub-assemblies purchased from different vendors to create an end user product. It also appears to favor larger manufacturers who produce everything as opposed to integrators.
Or do I have the VAT idea all wrong (which is quite possible!).
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