Less admin in the USA? I'm not even sure if anyone there understands how their sales tax works. To me the VAT systems seems far less complicated and the admin is really easy with a decent accounting package.Originally Posted by Dave A
Less admin in the USA? I'm not even sure if anyone there understands how their sales tax works. To me the VAT systems seems far less complicated and the admin is really easy with a decent accounting package.
That's just begging for a sarky comment
GST is a straight turnover tax on the final sale. It's not a federal tax and rates vary from state to state. Some states don't have it at all and the rate is pretty low in most states that do have it.
We used to have GST here, and believe me it was easier to administer than VAT.
The main advantage with VAT is it collects the tax at multiple points, in theory reducing the effect of "cheating," and probably the main motivation in our change to the VAT system.
I have to agree that accounting packages make either system fairly painless nowadays.
Participation is voluntary.
Alcocks Electrical Services | Alcocks Pest Control & Entomological Services | Alcocks Hygiene Services
I agree with all the above.....
The admin is lousy but it keeps the integrity of your accounts intact.
I think though that Sieg hit one of my issues which would make me think twice about registering for vat.
You can be more competitive with your pricing.The rates in our business are fairly market driven, price sensitive and similar across regional and local areas - similar to most business's I would imagine. So my rates, the same as my competitors, have to include vat. Although this is a selling point to corporations who are registered, the majority of buyers do not understand vat and are just looking for the best price, whether it is vat inclusive or not.
My competitors are able to offer discounts and specials and undercut my rates, in order to boost their business. I am already short in comparison to them on my bottom line..to give more away in specials just to rope in additional business is not necessarily the way to go.
Also there is always the potential of a tax audit and more aggravation.
Which is why one should be careful, when de-registering a cc or company from vat. I was told by a lady in the vat office that this is one of their triggers to come looking. Rather keep the existing business 'alive' and slowly get the numbers to zero - after a years worth of nil returns they may de-register you themselves and just hope you go away.
Even I remember that we used to have GST
I suppose my comment was more directed at the many levels of tax that the USA has, rather than the particular administration of a sales tax. I found their sales tax to be in the 8-10% range, but my understanding (based on a number of conversations) is that there are about 3 different taxes built into that (county, state, who knows what else).
When sales tax was administered was also a whole other story. If the company had offices in your state, then you had to pay sales tax, but if they were out of state then you didn't. In some cases certain stores wouldn't charge sales tax (not sure if that was based on location or item bought, e.g. buying a bagel in a train station versus out of the station).
It just seems to be such a multilayered tax system that I am sure the administration could present....challenges. I suppose because it is GST then you just pay 3% of turnover to this agency, 2% to that agency, and the other 3% to another agency. The only complication is figuring out and keeping track of what is taxed and what isn't (and who gets it).
Posting Permissions
Reply With Quote
Sponsored By: 
Did you like this article? Share it with your favourite social network.