Chris, Jacques, This is a good point, despite the fact that the price is inclusive of VAT, EU members will still tend to use these popular price points (1.00 1.99 1.95 etc).
Remember that for a VATable item, you are ultimately paying VAT only on the _V_alue you have _A_dded to the item For anyone unfamiliar, here is an example in british pounds although the principle is applicable to Euros too although the VAT rate may differ. Vendor buys product at £10,00 Vendor pays additional £1.75 (17.5% VAT) Vendor sells at £20,00 (inclusive of VAT) Vendor is liable for £3.50 (17.5% VAT) However vendor has already paid £1.75 to the distributor, leaving the balance of £1.75 due to the tax man. If these were the only two transactions in the VAT period, then your VAT bill would be £1.75. If however only the first transaction had happened (i.e. you hadn't sold-on the product) then you would be liable for a rebate of £1.75 from the tax man. VAT return statements reflect this dual aspect, i.e. you declare what the VAT man owes you and what you owe the VAT man. Does that make the process any clearer? - Andrew On Thu, 2006-10-12 at 15:26 -0700, Chris Howe wrote: > In the US, only the end user is paying sales tax as > well, yet we display prices excluding sales tax. > > Is the practice of quoting/showing prices including > VAT a government requirement or a market custom? > > The reason why I'm asking this question is because the > whole discussion about how to treat VAT is based on > US/nonUS marketing practices. The US has marketing > practices of certain price points that give the > illusion of value (ie $9.99, $49.00) or of using round > numbers (ie $10.00, $50.00) for simplicity with all of > these illusionary value numbers not including tax. > Yet, the VAT/GST countries want to use the same > illusion of value or simplicity but have it include > the tax adjustment. If it's an issue of marketing, the > solution should be handled by a marketing/ content/ > ecommerce approach, if it's an issue of tax, the > solution should be handled by a price adjustment/ tax > approach. > > --- Jacques Le Roux <[EMAIL PROTECTED]> > wrote: > > > From: "Chris Howe" <[EMAIL PROTECTED]> > > > Thanks for the responses, I guess I wasn't clear > > on my > > > question. If we agree on a price that is subject > > to > > > VAT, at who's discretion is it that the agreed > > price > > > is VAT inclusive/exclusive. > > > > > > ie, > > > the base price is 100 > > > VAT = 10% > > > final price = 110 > > > > > > When two parties agree upon a price, the agreed > > price > > > can either be 100 VAT exclusive or 110 VAT > > inclusive, > > > it's the same agreement and the end payment is 110 > > in > > > both situations. Who says that you have to list > > each > > > item on an invoice as VAT inclusive? Is it > > government > > > mandated that prices are promoted as VAT inclusive > > or > > > is it simply the custom of the marketplace? > > > > For an agreement (B2B you mean I guess, because > > there is no agreement in retail and there prices are > > fixed unilateraly - not in some > > parts of Africa BTW - always VAT inclusive) price > > are always VAT exclusive because only "end users" > > (customers) are paying VAT. > > In fact people that collect VAT for a tax authority > > (in the context of their work, me for instance) do > > not pay VAT for what they > > need in their business (they pay but when the send > > back VAT they have collected they deduce VAT they > > have paid). Of course ASA I'm > > going to buy bread I will pay VAT and will never see > > that money back (some are juggling with that but - > > no only with bread of > > course -, I already did see bad results, as > > everybody know : juggling is an art ;o). Some might > > say that it's not really true that I > > never see my money back : hospitals, roads, schools, > > etc. : 43% of them come from VAT in France. > > > > HTH > > > > Jacques > > > > > -- Kind Regards Andrew Sykes <[EMAIL PROTECTED]> Sykes Development Ltd http://www.sykesdevelopment.com
