In 2018 Saudi Arabia imposed a Value-Added Tax (VAT) on the supply of goods and services...
In 2018 Saudi Arabia imposed a Value-Added Tax (VAT) on the supply of goods and services at a standard rate of 5%. Discuss the welfare effects of the VAT reform, and its implications for businesses and taxpayers.
Homework Answers
The imposition of a Value Added Tax (VAT) on the supply of goods and services at a rate of 5% will increase the price of goods and services in the market due to which consumers, producers and taxpayers will have additional tax burden on them. Due to the imposition of tax, consumers will pay higher price for the same products they were purchasing at a relatively lower price earlier due to which the purchasing power of individuals will also fall. There will be negative impact of tax on businesses as well because they will receive relatively low revenue for goods and services sold which will ultimately reduce the profit of businesses. Due to higher prices, the aggregate demand will also fall and create deadweight loss which will lead to a fall in total welfare in the economy.
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In 2018 Saudi Arabia imposed a Value-Added Tax (VAT) on
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Value Added Tax (VAT) must be ignored.
QUESTION 2 VALUE ADDED TAX (VAT) The totals of the journals provided below were extracted from the records of Musi Traders, a registered VAT vendor, for June 2016. Musi Traders commenced operations on 01 June 2016. VAT is levied at 14%. None of the products sold by Musi Traders are zero-rated or VAT exempt. REQUIRED Post to the following accounts in the General Ledger: 2.1 VAT Input 2.2 VAT Output 2.3 Debtors Control...
b) A tax is a compulsory levy imposed by a public authority against which tax payers cannot claim anything. TABLE.2 TAX SCHEDULE TAX RATE VAT 16% PAYE 3300 AND BELOW 0% 3300.1-4200 4200.1-6200 25% 30% 37.5 6200.1 AND ABOVE CORPORATE TAX 35% 1 ii. Mr. Notulu gets paid a gross salary of k15, 000. Calculate how much his net salary is going to be. Select the appropriate tax to use from the table above. State the type and classification where...
2. Assume that the prices of a standard basket of goods and services in different countries are as follows . United States $40o .Canada C$500 . United Kingdom £220 .Japan Y60,000 a. What are the implied PPP exchange rates? b. How would the presence of a high sales tax in Britain, such as the value added tax (VAT), influence your guess of where the actual value of S($/E) would be vis-à-vis the PPP value of S($/E)?
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