Explanation of a VAT Return
A value added tax (VAT) return is filed in countries utilizing the VAT tax, a consumption tax on consumer goods and services added at each stage of production, distribution or service. Only the increased value at each stage is taxed.
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Filing
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Know the due date of the return. VAT returns are filed by a registered VAT taxpayer. The taxpayer is an individual or entity that supplies goods or services. The filing date of the VAT return may be monthly, quarterly, bi-monthly or bi-annually and is filed with the revenue authority of that country. The payable tax may be due on, or shortly, after this date.
Calculation
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The final calculation is simple. The VAT to pay or reclaim is summarized in a simple calculation. VAT collected from the customers is deducted from VAT paid to the vendors. Sales and expenses must relate to the purpose of acquiring and improving the good or service.
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Allowances
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Understand the rules relevant to the country. Completing a VAT return requires accurate financial records, such as bank statements, invoices and receipts for customers and vendors. Allowable business sales and expenses, as well as import and export rules, are country-specific and must be identified and understood.
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References
Resources
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