| Value
Added Tax is the common system of turnover
tax implemented... |
| VAT will be intreduced in
Lebanon starting from 2001 |
At its simplest, VAT is a
tax on consumption. However, unlike sales taxes (which are dealt with by a
limited number of businesses at the wholesale or retail stage) VAT is a
multi-stage tax (applied at every stage of the production process), which
is applied to both goods (tangible property) and services.
Additionally, although the tax is ultimately borne by the consumer (by
being included in the price paid), responsibility for charging, collecting
and passing the tax on to the tax authorities, rests with the supplier. |
| How
does the tax work? |
Basically, a business will
pay VAT (input tax) on its purchases and charge VAT (output tax) on its
sales. The difference between the two will be the amount of VAT due from
the business (Tax on the Value Added).
For example:
| SALES |
150 |
15 |
| Purchases |
100 |
10 |
| Net VAT due |
 |
5 |
| Net profit |
50 |
|
| VAT on profit |
50 x 10% |
5 |
|
|
| Is
it really as simple as that? |
| Unfortunately no! Whilst
the principles of the tax are reasonably simple, applying the tax in
practice is far more complicated -- output tax is not chargeable on all
sales and input tax cannot be reclaimed on all purchases. At the same
time, dealing with the VAT consequences of every transaction, submitting
returns on time and finding the funds to pay the tax can prove a
significant drain on business resources. |
| Why
should I be interested in VAT? |
| VAT affects every
transaction and, with the current proposed rate being 10 per cent,
mistakes can be costly and involve large amounts of tax. In addition there
can be penalties and interest charges for mistakes and the late submission
of returns.
Therefore, all businesses need to ensure that they
are dealing with their VAT affairs properly, are collecting the right
amount of tax and are submitting and paying tax returns on time. |
| VAT Lebanon can help you
comply with all your VAT obligations, deal with the authorities on your
behalf and help you understand and cope with the increasing complexities
of the tax. It can also act as a support function on a daily basis, when
you have questions or require help. Above all, VAT Lebanon can offer you
peace of mind. |
|
|
|
|
