Value-added tax VAT

As we know all countries demand value added taxes and our business is not exempt from this. VAT is understood as the tax burden applied to the consumption of goods and services. Naturally the main benefit of this tax is received by the state in order to raise funds for public affairs projects and the economic infrastructure itself.

Knowing this issue is necessary for us as a Business Coach because it will help us to have answers to the mechanisms of operation of the tax and tribute for our nation.

In what cases is VAT paid?

According to the value added tax laws, it is mandatory to pay VAT to self-employed persons when executing activities such as possession of tangible goods in use or services. The rendering of services by commission agents is the most frequent case in which we must pay VAT; the acquisition of raw materials for industrial activity and its commercialization. The use of goods such as leasing of items on a temporary basis, spaces or properties for a payment are also taxed; in addition to the importation of goods and services.

Transfer of VAT.

VAT is an indirect tax that we transfer with our services or products to the consumer. The VAT transfer is charged to the customers who consume our product, that is to say, it constitutes a value that we can include in our price. Normally, this transfer is clearly explained in a price breakdown where we include the VAT when invoicing a payment voucher to the customer. This type of transfer benefits our business with the purpose of collecting our tax fund little by little, otherwise we would pay it out of our pocket and it would represent losses.

Creditable VAT.

The creditable VAT is passed on to the customer when he/she purchases a product. The function of the creditable tax is to verify the payment and to prove its legality. The creditable VAT invoices must be considered in our accounting so that, in case of payment differences, a refund can be requested to the tax authorities. If we purchase a product with invoices, it can become creditable when proving such payment. In case of acquiring a product or service in credit installments it is also included in our invoice to avoid later complications in the tax return and it is legalized at the conclusion of the payment process.

VAT exemptions.

As you can imagine, not everything is one color, there are also value added tax exemptions. In general, public or private educational institutions and health care provided by trained professionals are exempt from VAT. Also exempt are deliveries of rural and non-building land, insurance or reinsurance services and training; delivery of stamps for