What is VAT: The Basics of Accounting

What is VAT? VAT is, perhaps, the most popular tax among all existing. It is paid by all production organizations operating under the general taxation regime. On the one hand, everyone knows about him. On the other hand, these knowledge is usually so superficial that it seems to many that VAT is a simple addition of 18 percent to the cost of a good or service.

There are no simple taxes. The characteristic of VAT shows that this tax has a rather complex structure , as some enterprises are exempted from paying it, some receive certain benefits. Therefore it is important to know such nuances that it is correct to calculate VAT and not lose your own money at the same time because of a lack of knowledge in this area. It's about elementary fines.

What is VAT? General concepts

The value - added tax is an indirect tax, that is, a premium to the price of the goods. It is a form of withdrawal of a part of the added value to the state budget. VAT is defined as the difference in the value of goods sold (services) and the cost of material inputs for production and circulation.

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

In Russia, VAT has been in force since 1992. Now the procedure for calculating VAT and its payment is regulated in Chapter 21 of the Tax Code of the Russian Federation.

Starting from January 1, 2004, the VAT rate is 18%.

Payers of VAT are enterprises and individual entrepreneurs, individuals who transport goods across the border. The organizations and businessmen who work under special tax regimes are exempt from VAT payment . Therefore, it is necessary to know what VAT is both for legal entities and individuals.

There is an opportunity to get rid of VAT payment even when working on a general regime (art. 145 of the Tax Code). According to him, VAT can not be paid to enterprises whose revenues in the last three months have not exceeded 2 million rubles. For release, you need to contact the tax inspectorate.

Objects of taxation of VAT are operations of the sale of goods (services) and the transfer of property rights. In addition, the objects are also operations for the transfer (including gratuitous) of goods, services, construction and assembly works intended for own consumption, as well as goods imported into the territory of the Russian Federation.

About 70 types of operations under Art. 149 and 150 of the Tax Code are exempt from VAT, and listed in Art. 146, item 3 of the transaction are not subject to VAT at all.

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

The tax base is the amount with which the tax is calculated. It is determined (Article 153-162 of the Tax Code of the Russian Federation), depending on the type of goods sold. If the taxpayer implements different tax rates, the tax base is calculated separately for each type of goods (services) that are taxed according to the types of rates. If the same rates apply, the tax base is considered total for all types of transactions that are taxed at this rate. In some cases, the tax inspectorate asks for an explanation of the VAT if a variety of rates and objects of taxation is observed.

The duty to pay VAT arises on the day of payment or shipment (including partial) of the goods (services).

The tax is paid quarterly. From the amount of tax deductions are made. If they exceed the amount of VAT paid, the difference is refundable.

VAT rates are: 0%, 10% and 18%. The list of goods at reduced rates is given in art. 164 of the Tax Code.

Taxation at a zero rate for an enterprise is more beneficial than exemption from VAT. In this case, you can refund VAT on purchased goods.

The amounts of VAT paid when buying goods (services) in the territory of the Russian Federation are deducted from the amounts of goods sold. In this regard, organizations that pay VAT do not work with enterprises that carry out activities under other tax regimes.

Thus, to understand that such a VAT becomes a little easier. In practice, this tax is very similar to the turnover tax: each seller adds this tax to bills. The buyer can deduct this tax from the amounts paid for the goods (services). As a result, VAT is actually paid not to sellers of goods, but to their final retail consumers. This system allows you to avoid paying tax on the tax. VAT will be levied actually only when the goods hit the hands of the end user.