When you are doing business, then you need to pay tax to the government for that. However, just like any other process, the value-added tax also has different types and procedures. Different businesses fall under different categories so that rules and regulations will be different based on the category. Because it is a newly introduced concept in UAE, so companies are still trying to understand the process of dealing with it. The most common problem is not being able to understand which category their business fall for the VAT. Because it is a confusing process, so business owners often seek professional assistance. In case you are looking for such help too you can always opt for the best VAT consultancy in Dubai for top-notch advice on the VAT matter. While you are checking their services out, read on this article to understand the types of VAT which exist and the difference between each one of them. Everything one should know about various types of VAT:The different business offers different products, and the type of VAT which will be applicable to them is determined by the goods a firm will be providing to the customers. There are three main types of VAT, which are consumption type, Income type, and gross national product. Each of these depends on the conditions businesses pay the tax on all capital goods. Following is extensive information on different types and the difference between each one of them: Consumption Type VAT:When it comes to the VAT type that is based on the consumption type, then it refers to the tax which is imposed on the product when the value is added in from production to the point of sale. The user pays the tax based on the cost of the product. Under this category of the tax, the goods which are bought from the different firm are not included. This is because the base of the tax is the consumption which will make everything regarding the business different than other types. Income type VAT:This is another category for the VAT which does not exempt the good purchased from other firms during the year of purchase, which is the exact opposite from the consumption type VAT category. The process of tax or the amount of the tax is both for the consumption and overall investment. In other words, you pay the tax on the net income. Gross national product type VAT:This type is the combination of the income and consumption-type VAT because it does not exempt the purchased goods in the year of purchase. It also does not exclude the depreciation deduction from the tax. In other words, businesses following this type of VAT are on consumption, gross and net income Concluding words:The VAT is a complicated process, and among these three types, consumption one is most widely used. If you are still not sure which one to follow then take on the professional advice from the Best VAT consultancy in Dubai so that you choose the right type which fits well with your business.
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