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Taxation Degree - Essay Example

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Taxation Degree

The incidence of tax is shifted more on the high-income group than to the low-income group (Samuelson and Nordhaus 1992). Following are the effects of taxation on income:
Suppose that a product, say laptop, has been imposed a VAT. The burden of this tax imposition will not be born by the supplier or manufacturer of the laptops rather it will be passed on to its customers by raising the price of laptops by the percentage of the tax imposed.
Registration for VAT makes an overall good impression for your company. Since large corporations usually register for VAT, therefore, if a newly established company registers itself for VAT, the customers, and for that matter suppliers, heed it as an established, large company.
Registration for VAT also has financial benefits. If a newly-established company registers for VAT then it automatically avoids the penalties for non-registering when it becomes legally mandatory to register for VAT. It is a precautionary step.
VAT registration has another financial benefit. If a company who is registered for VAT ends up having most or all the sales at a zero rate then it can demand VAT refund that it had been charged during the period of sales at zero rate.
Redistribution: It's also another important purpose of a tax. ...
2

A larger share of burden of VAT falls upon the consumers because the producer / manufacturer (VAT registered persons or companies) pass on the financial impact of such a tax on to the consumers.
Suppose that a product, say laptop, has been imposed a VAT. The burden of this tax imposition will not be born by the supplier or manufacturer of the laptops rather it will be passed on to its customers by raising the price of laptops by the percentage of the tax imposed.
The ultimate consumer bears the burden of VAT and it's him whose consumption is being affected through a value-added tax.

QUESTION NO. 3


Advantages:

Registration for VAT makes an overall good impression for your company. Since large corporations usually register for VAT, therefore, if a newly established company registers itself for VAT, the customers, and for that matter suppliers, heed it as an established, large company.

Registration for VAT also has financial benefits. If a newly-established company registers for VAT then it automatically avoids the penalties for non-registering when it becomes legally mandatory to register for VAT. It is a precautionary step.

VAT registration has another financial benefit. If a company who is registered for VAT ends up having most or all the sales at a zero rate then it can demand VAT refund that it had been charged during the period of sales at zero rate.
Disadvantages:
The company is now legally required to begin maintaining VAT records, which requires plenty of paperwork, filing in regular VAT returns, and details of company's sales and purchases.
If the VAT registration is deferred and backdated, the company may require to formulate particular arrangements to cover its VAT liability.
The company can not reclaim the VAT it has been charged if it ...Show more

Summary

VAT is sometimes regarded as an anti-poor tax. It impacts hardly on lower-income groups and results in exacerbating the financial predicaments of poor. Following are some of the impacts of VAT on low-income groups:
From a layman's view, the income effect is straightforward: as taxes go up, households are poorer and behave that way…
Author : keelinghank
Taxation Degree Essay essay example
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