Value Added Tax: A Comparative Approach (Cambridge Tax Law Series)

Cover......Page 1
Half-title......Page 3
Title......Page 5
Copyright......Page 6
Dedication......Page 7
Contents......Page 9
List of Tables, Figures, and Charts......Page 25
List of Cases......Page 27
Preface to the Revised Edition......Page 35
I Introduction......Page 39
II Development of Taxes on Consumption - A Brief Review of History......Page 40
A Direct and Indirect Taxes......Page 43
B Income and Consumption Base for Tax......Page 46
IV Tax Structures in Developed and Developing Economies......Page 51
VI The Value Added Tax......Page 54
VII The Proliferation of VATs......Page 55
VIII Glossary of VAT Terms......Page 57
IX Outline of Issues Pertaining to Consumption Taxes......Page 61
X Discussion Questions......Page 62
I Introduction......Page 63
III Taxing Imports......Page 65
IV Taxing Exports......Page 66
B Consumption-Based Direct Tax on Individuals......Page 68
A In General......Page 71
C Inclusion of Vat in Tax Base......Page 73
D Inclusion of Capital Goods in Tax Base......Page 74
A Credit-Invoice Vat......Page 76
B Credit-Subtraction VAT That Does Not Rely on VAT Invoices......Page 79
D Addition-Method VAT......Page 80
IV Methods of Altering the Tax Base......Page 84
A Entity Exemptions......Page 86
B Zero Rating......Page 88
C Transaction Exemption......Page 90
E Multiple Rates......Page 92
V Discussion Questions......Page 93
I Introduction......Page 96
II European Union: A Mature VAT Resistant to Change......Page 97
B European Court of Justice......Page 101
2 When Is a Tax on Consumption Not a Turnover Tax or VAT in Violation of the Sixth Directive?......Page 102
1 Credit-Subtraction VAT without Invoices......Page 105
2 Movement Toward Invoice-Method VAT......Page 106
B Taxation of Government Services......Page 107
D Global Reach of the New Zealand GST......Page 108
VI Commonlaw and Civil Law Approaches......Page 109
A In General......Page 111
1 General Rules......Page 112
2 Promoters of Public Entertainment......Page 113
3 Registration Regardless of Turnover......Page 114
1 In General......Page 115
3 Splitting a Business and the Related Person Rules......Page 119
4 Severing Value from the Business......Page 122
D Voluntary Registration......Page 124
E Cancellation of Registration......Page 125
G Registration of Branches and Group of Companies......Page 126
H Electronic Commerce......Page 127
I Telecommunication Services......Page 129
A General Principles......Page 131
1 In General......Page 132
2 Electronic Commerce and Telecommunication Services Rendered by Nonresidents......Page 133
4 Other Sales by Nonowners......Page 134
5 Local Government Services......Page 135
A Taxable Activity......Page 136
B Personal Sales......Page 140
C When Does a Business Begin?......Page 144
D Employee Not Engaged in Taxable Activity......Page 146
V Discussion Questions......Page 147
II Sales of Goods and Services......Page 149
A What Is a Sale or Supply?......Page 150
1 Nonsupplies or Supplies Other Than in the Course of Taxable Activity......Page 151
2 Sales for Consideration......Page 154
a Cease to Conduct Taxable Transactions......Page 160
b Diversion of Business Assets to Personal or Employee Use......Page 161
B Goods or Services......Page 162
C Supply of Goods......Page 163
D Supply of Services......Page 164
E What Is "the" Supply for VAT Purposes? -Single, Mixed, and Composite Supplies......Page 168
F Vouchers......Page 175
A Role of VAT Invoice......Page 176
C Contents of Required VAT Invoices......Page 177
IV Discussion Questions......Page 178
1 Allowance of Credit - General Rules......Page 179
2 Credit for Input VAT on Capital Goods......Page 181
3 Conditions to Claim Credit for Input VAT......Page 182
4 Credit Denied on Purchases for Exempt and Other Nontaxable Transactions......Page 187
B Impact of Subsidies on Allowable Input Credits......Page 196
C Pre- opening Expenses and Posteconomic Activity......Page 197
E Transactions Involving Shares and Debt......Page 199
F Bad Debts......Page 204
II Treatment of Excess Input Credits-Carry Forward, Offset, or Refund......Page 205
III Impact of Change from Exempt to Taxable Status......Page 209
B Sales of Used Property in Nontaxable Transactions......Page 210
B Returns and Allowances - Credit and Debit Notes......Page 213
VI Casual Sales by Consumers......Page 214
VII Japan's System to Calculate Input Credits......Page 215
VIII Calculation of Tax Liability and Special Schemes......Page 216
IX Discussion Questions......Page 217
I Introduction to International Trade......Page 218
III Taxonomy of Broad-Based Sales Taxes on International Trade......Page 219
A In General......Page 220
B Double Taxation of Consumer-to-Consumer Imports......Page 222
A Basic Rules on the Place of a Supply of Goods and Services......Page 226
C Territorial versus Global Reach of a VAT......Page 233
A Imports of Goods......Page 240
B Imports of Services......Page 241
B Exports of Services......Page 243
A Introduction......Page 247
1 Telecommunications Services......Page 248
2 Radio, Television, and Electronically Supplied Services......Page 250
3 Electronic Commerce......Page 254
IX International Transportation Services......Page 257
B Professor Kaneko’s Proposal to Fund Disaster Relief with an International Humanitarian Tax......Page 258
C Proposals by President Chirac and Others to Fund Poverty Relief Efforts, the Fight against AIDS, or Development Projects......Page 260
XI Discussion Questions......Page 261
A Accrual, Invoice, and Cash Methods-in General......Page 262
1 Imports......Page 264
2 Accrual Method......Page 265
3 Invoice Method......Page 272
4 Cash Method......Page 273
1 Taxable Period-in General......Page 274
2 Variations in Length of Period......Page 275
4 Cash-Flow Effects......Page 276
1 Installment or Deferred Payment Sales......Page 277
A Introduction......Page 279
B Transition Rules Applicable to Repealed Sales Tax......Page 280
C Timing Differences between Sales Tax and VAT and Supplies Straddling the VAT Effective Date......Page 281
A Taxable Amount or Value of a Supply-General Rule......Page 284
B Sales Free of Charge or for a Nominal Charge......Page 289
C Discounts, Rebates, and Price Allowances......Page 290
E Postsale Adjustments......Page 292
F Related Party Transactions......Page 294
G Margin Schemes......Page 295
H Sales to Door- to-Door Sellers and Similar Independent Contractors......Page 296
I Self-Supply Transactions......Page 297
1 General Rule......Page 298
4 Imports from Unregistered Persons......Page 299
IV Discussion Questions......Page 300
A In General......Page 301
B Zero-Rated Exports......Page 304
C Authority to Zero Rate Other Transactions......Page 305
III Exempt Sales......Page 306
IV Allocation of a Single Price between Supplies With Different Tax Consequences......Page 317
V A-B-C Transactions......Page 318
A Introduction......Page 320
B Various Approaches to the Taxation of Governments and NPOs......Page 323
C Taxation in New Zealand......Page 327
D Taxation in the European Union......Page 328
VII Special Treatment for Diplomats, Embassies, and International Organizations......Page 336
VIII Discussion Questions......Page 337
II Gambling, Lotteries, and Other Games of Chance......Page 339
A Introduction......Page 342
B Variety of Transactions Involving Financial Services......Page 343
C Financial Intermediation Services......Page 344
D Principles to Guide the Taxation of Financial Services......Page 351
1 Introduction......Page 352
2 Exemption for Financial Services in the EU Followed Elsewhere......Page 353
G Vertical Integration and Outsourcing......Page 355
1 Introduction......Page 362
2 Methods of Allocating Disallowed Credits......Page 363
1 Introduction......Page 365
2 Israel and Argentina......Page 366
3 South Africa......Page 367
4 Singapore, New Zealand, and Australia......Page 369
B Canadian Flirtation with Taxation of Intermediation Services......Page 373
C Proposals in the United States......Page 374
D The Poddar–English Proposal......Page 375
E Zee’s Modified Reverse-Charging Approach......Page 377
V Discussion Questions......Page 379
I Introduction......Page 381
B Domestic Insurance Services......Page 382
II Broad-Based Tax on Casualty Insurance......Page 383
III Exemption for Insurance Other than Life Insurance......Page 384
IV New Zealand Taxation of Insurance......Page 386
A Application of the N.Z. Taxation of Casualty Insurance to Policyholders in Business......Page 389
B Application of the N.Z. Taxation of Casualty Insurance to Policyholders Who Are Consumers......Page 391
C Are Warranties “Insurance” in New Zealand?......Page 392
V Australia's Taxation of Insurance......Page 393
VII Discussion Questions......Page 394
I Introduction......Page 396
A Introduction......Page 399
B Selected Provisions of the Treaty Establishing the European Community......Page 400
D EU Required Exchange of Tax Information......Page 402
III EU Member States Limited to One VAT......Page 403
1 In General and Early Proposals......Page 411
2 The Keen and Smith VIVAT for Intra-EU Trade......Page 412
B Variety of Canadian Sales and Value Added Taxes......Page 414
C Bird and Gendron Dual VAT Proposal......Page 416
D Application of Dual VAT Concept to the EU......Page 418
A Brazil's Tax Structure in General......Page 419
B Varsano's "Little Boat Model"......Page 420
C McLure's CVAT Modification of Varsano Proposal......Page 422
D Comparison of the Features of the CVAT, VIVAT, and Dual VAT Proposals......Page 426
A Enacted State-Level VATs......Page 428
B Prepaid VAT Proposed for India by Poddar and Hutton......Page 430
VIII Origin-Based Business Value Tax (BVT) to Finance Subnational Government......Page 431
IX Reform of Subnational Taxes in the United States......Page 433
A Coexistence of Federal VAT and State Retail Sales Tax......Page 435
B Subnational VATs in Use and Proposed for the United States......Page 436
1 Michigan Single Business Tax......Page 438
2 West Virginia's Proposed Single Business Tax......Page 439
3 New Hampshire Business Enterprise Tax......Page 441
C Streamlined Sales and Use Tax......Page 442
D Ainsworth’s Digital VAT......Page 443
X Discussion Questions......Page 444
II Array of VAT Treatment of Real (or Immovable) Property......Page 446
A In General......Page 449
1 What Is a "Lease" or "Letting" of Immovable Property......Page 450
2 Disposition or Transfer of a Lease......Page 455
C Mixed Business–Personal Use......Page 463
D Tax-Motivated Transactions......Page 466
IV Proposals for the Taxation of Real Property......Page 467
V Discussion Questions......Page 469
I Introduction......Page 471
A Introduction......Page 473
B Value Added Tax Considered......Page 474
C The Growth and Investment Tax Plan......Page 475
III Gibbons and Graetz VATs Replacing Most Income Tax......Page 478
A Introduction......Page 480
B The Business Tax......Page 481
C The Income Tax......Page 483
V The Flat Tax......Page 486
B Shelby Flat Tax......Page 487
A Introduction......Page 489
1 Basic Framework and Scope of the Tax Base......Page 490
2 Special Treatment for Government Entities and Nonprofit Organizations......Page 491
3 RST Credits......Page 492
5 Taxation of Financial Intermediation Services......Page 493
7 State Authority to Collect Tax and Federal Support......Page 494
VII Elective Flat Rate Income Taxes......Page 495
VIII Discussion Question......Page 496
Appendix A: VATs Worldwide......Page 497
Appendix B: Commonwealth of New Vatopia Value Added Tax Act......Page 501
Index......Page 563