Understanding VAT Terminology and Principles
VAT is a noncumulative tax that tax authorities impose at each stage of the production and distribution cycle. If you work with VAT, you should understand these terms and principles:
Term |
Description |
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Output VAT |
Suppliers of goods and services must add VAT to their net prices. They must record output VAT for goods on the date that they issue invoices and for services on the date that they receive payment. The amount of VAT is determined by applying specific rates to the net selling prices of certain goods and services. Output VAT is also called:
|
Input VAT |
Input VAT is the VAT paid by the purchaser of goods and services. If the purchaser is subject to output VAT, the purchaser can recover input VAT by offsetting it against output VAT. When input VAT exceeds output VAT, the purchaser can forward the VAT balance as a credit toward the tax authority for the next reporting period; or receive a cash refund, depending on the policies of the tax authority. Input VAT is also called:
|
Nonrecoverable Input VAT |
Input VAT cannot be recovered for:
|
County-specific information about VAT processing exists for many countries supported by JD Edwards EnterpriseOne applications. Refer to the documentation for each country for information about VAT for the supported countries.