Comment by seanmcdirmid
19 days ago
So let's say you make something in Europe, you pay VAT on the inputs, when it is sold to someone, they pay VAT, you take the VAT that the consumer paid and deduct the VAT you already paid to make the thing, sending the rest to the government, who only gets 20% on the thing, it doesn't get 20$ + 10% + 5% + .
You have to keep receipts of the VAT you paid to make the thing to do this, Europe doesn't like sloppy paper work, and rightfully so. Except...America doesn't have VAT, so there are no VAT rebates, they pay taxes on inputs and the consumer pays 20% on the finished item. But you are also right: if Norway exports a thing to the USA, they aren't getting a VAT rebate either from the sales tax paid on the thing in the states (or does Norway get a VAT rebate on things exported to non-VAT countries? I'm not sure).
But really, VAT is a better way, you avoid double taxation. The US should really just adopt it and make their VAT system compatible with Europe.
So that make short of sense, except according to this
"Selling goods to customers outside the EU
If you sell goods to customers outside the EU, you do not charge VAT. However, you may still deduct the VAT that you paid on related expenses, such as for goods or services purchased specifically to make those sales."
So the inputs are not more expensive to American importer. Yes the European company is compensated for the VAT they paid on an input, but this is a tax to begin with. Which the US companies not pay. So this is not unfair to the US company..
Or is there something I'm not getting?