The Legal Mechanism for VAT Implementation in GCC Countries
In financial taxation, a tax is not imposed without a fact that justifies its imposition. In the net income tax, the fact of making a profit according to the annual financial statements is the fact on which the income tax is imposed. The justification behind the income tax is that the income fact proves the success of the project in light of the environment that the state provides for the project, and for this the state has the right to obtain a percentage of the profits in the form of an income tax.
While for the value-added tax, the fact that the tax is imposed is not an operation of capital or the achievement of a specific financial achievement, but rather a mere fact of consumption of goods and services, no matter how simple the consumption.
This means that the justification for imposing a value-added tax is a person’s ability to consume, which reflects his good financial ability under the conditions provided by the state, and for this the state imposes a tax on his consumption that is calculated at an additional rate on the value of the goods or services consumed.
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