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jonsk

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About VAT - incoming VAT to the business is deductable
« on: June 01, 2009, 12:47:37 AM »

I am living in Norway and the VAT System is like this:

if I have a VAT registrered company then I must charge 25% VAT on all my bills, and these 25% I must pay to Government every second month. I can however deduct all 25% VAT on incoming goods.

If I am a pencil producer and buy lead for say 50USD, then I must pay 62.5 USD to the lead manifacturer.
If I plan to sell each pencil for say 1 USD, then I must sell them for 1.25 USD to the shop.
If I sell like 100 pencils, then I have to pay government 25 USD, but I can deduct 12.5 USD which was the VAT for the lead, thsat means my VAT expenses was 12.5 USD.

The end purchaser will have to pay whatever retail price the shopkeeper takes. If the pencil cost 2 USD, then he will have to pay 2.5 USD for a pencil. If the shopkeeper sell 100 pencils, then he will have to pay 50 USD - 25 USD = 25 USD.

The VAT regime is very much stricter than normal tax. Thats because government think its their money. They are more polite and slow getting income tax (done at community level). But the VAT you must be very sure to pay on time, because you get horrible fines and delay charges. The penalties for VAT evation is stricter than other types of tax crimes.
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miamiballoonguy

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Re: About VAT - incoming VAT to the business is deductable
« Reply #1 on: June 01, 2009, 01:40:04 AM »

I am living in Norway and the VAT System is like this:

if I have a VAT registrered company then I must charge 25% VAT on all my bills, and these 25% I must pay to Government every second month. I can however deduct all 25% VAT on incoming goods.

If I am a pencil producer and buy lead for say 50USD, then I must pay 62.5 USD to the lead manifacturer.
If I plan to sell each pencil for say 1 USD, then I must sell them for 1.25 USD to the shop.
If I sell like 100 pencils, then I have to pay government 25 USD, but I can deduct 12.5 USD which was the VAT for the lead, thsat means my VAT expenses was 12.5 USD.

The end purchaser will have to pay whatever retail price the shopkeeper takes. If the pencil cost 2 USD, then he will have to pay 2.5 USD for a pencil. If the shopkeeper sell 100 pencils, then he will have to pay 50 USD - 25 USD = 25 USD.

The VAT regime is very much stricter than normal tax. Thats because government think its their money. They are more polite and slow getting income tax (done at community level). But the VAT you must be very sure to pay on time, because you get horrible fines and delay charges. The penalties for VAT evation is stricter than other types of tax crimes.


welcome to the US of Obama.  Nobody's Income tax would be raised...   but everything else is up for grabs.
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LordMarius

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Re: About VAT - incoming VAT to the business is deductable
« Reply #2 on: June 01, 2009, 05:32:19 AM »

I am living in Norway and the VAT System is like this:

if I have a VAT registrered company then I must charge 25% VAT on all my bills, and these 25% I must pay to Government every second month. I can however deduct all 25% VAT on incoming goods.

If I am a pencil producer and buy lead for say 50USD, then I must pay 62.5 USD to the lead manifacturer.
If I plan to sell each pencil for say 1 USD, then I must sell them for 1.25 USD to the shop.
If I sell like 100 pencils, then I have to pay government 25 USD, but I can deduct 12.5 USD which was the VAT for the lead, thsat means my VAT expenses was 12.5 USD.

The end purchaser will have to pay whatever retail price the shopkeeper takes. If the pencil cost 2 USD, then he will have to pay 2.5 USD for a pencil. If the shopkeeper sell 100 pencils, then he will have to pay 50 USD - 25 USD = 25 USD.

The VAT regime is very much stricter than normal tax. Thats because government think its their money. They are more polite and slow getting income tax (done at community level). But the VAT you must be very sure to pay on time, because you get horrible fines and delay charges. The penalties for VAT evation is stricter than other types of tax crimes.


Cool, another Norwegian" Where you at, bro? The VAT system here is horrible. I work in accounting, and most of my day is spent punching numbers to report the VAT for self-employed people. To flesh it out a bit, the VAT for person transportation like buses and taxis is 8%,  food is 14%, and everything else is 25%. Artists, cinemas, bookstores and any other in the cultural and medical industries are excempt. On top of that, if you are evil enough to create value and employ people, you'll have to pay a sum equal to 14% of their wages in employment tax.

The VAT, being a flat tax, is mostly damaging to people with low incomes. When your income is low, having your food budget raised by 14% is not the best thing that can happen. Especially when the income tax is shockingly high even for the poor.
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jonsk

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Re: About VAT - incoming VAT to the business is deductable
« Reply #3 on: June 02, 2009, 11:40:20 AM »

I have actually escaped Norway for a year or so, I am living and working in Qatar where there is no income tax. Thanks for completing the post with more accuracy. I am desperately in need for an accountant if you are interested
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