The importance of the value added tax and its calculation

Materials and methods
Value added tax means that every enterprise that creates value for a finished product pays only the amount of value added. K. Yahyaev argues “that taxes are divided into indirect and direct taxes, depending on their economic nature. Legitimate payers of indirect taxes, value added tax are shippers (service providers) of goods (works, services). But the real taxpayers of the budget are the consumers of goods (works, services), i.e. the real taxpayers are hidden here. These taxes are added to the cost of goods (works, services)”[2]. It was introduced in our country in 1992. One of the main reasons for the introduction of value added tax is to create a sustainable basis for the formation of the state budget, which is important in terms of ensuring state budget revenues and the formation of market relations. Naturally, when business entities conduct their activities, the question arises as to whether it is better to pay value added tax on goods sold or sales tax, and we will try to answer this question as follows.
The payers of value added tax are legal entities of the Republic of Uzbekistan. According to B.I. Isroilov, "value added tax is imposed on legal entities engaged in all types of economic activities, importing goods (works, services), except for legal entities that have a special procedure of taxation in accordance with the current legislation and individuals who import goods in excess of duty-free import for their own needs of taxpayers[3]”.
J.B. Maverick’s article is said “value-added tax (VAT) is a consumption tax that is levied on a product repeatedly at every point of sale at which value has been added. That is, the tax is added when a raw materials producer sells a product to a factory, when the factory sells the finished product to a wholesaler, when the wholesaler sells it on to a retailer, and, finally, when the retailer sells it to the consumer who will use it”[4].
Statement of the main research
The object of taxation is:
1. Turnover from the sale of goods (services) in the Republic of Uzbekistan at the place of sale.
2. Import of goods into the territory of the Republic of Uzbekistan.
The tax return must be submitted monthly, no later than the 20th of the month. The due date must not be later than the accounting period. Tax rate is 15% and turnover of export and equivalent operations is taxed at 0%. The procedure for calculating value added tax can be illustrated by the following example. For instance, assume that all entrepreneurs working in a system producing agricultural producers pay taxes on "turnover". Fermers produces 1,000 sum worth of sunflower seeds, from which it buys seeds and sets the price for the marketer at 1,400 sum. After taking the marketer, another company fries and packs up goods from it and sells it to a wholesaler for 1,700 sum. The wholesaler sells the goods to the retailer for 2,000 sum. With the profit, the shop sells sunflowers seeds about 2,200 sum.
"Value added tax" requires calculating tax only on the amount of value added. According to the above example, agricultural producers charge tax of 1,000 sums, fermer pays value added tax of 400 sums, a marketer pays 300 sums, and a retailer in our example pays 300 sums and 200 sums. That is: 1000 + 400 + 300 + 300 + 200 = 2200 sum. The price that the shop sells to the end consumer includes a 15% value-added tax.
So,
2200 ----------------- 115%
X ---------------- 15%
x = (2000 * 15%) / (115%) = 286.9 the amount of value added tax.
Here we calculate VAT from the price of goods 2200 UZS, That is not 330 UZS. The price of the goods was actually 1913.1 UZS, of which added 15% and amounted to 2200 UZS.
If we now assume that each of these businesses is a turnover taxpayer, then 1000 + 1400 + 1700 + 2000 + 2200 = 8300 sum. The total turnover is 8,300 sum, of which the turnover tax is 4%, or 332 sum. This is not just a final sum, if you note that the price of the goods produced in the first venture is within each subsequent product, and in fact the cost of the goods for 1000 sum is taxed 5 times 4% of the turnover. These taxes will be paid by only buyers. That is, while it may seem like a lot in terms of interest, the amount of tax may even fall below the 'turnover tax'. This means that for today's 'generation' who have paid basic turnover tax, the said 15 per cent VAT can be interpreted somewhat differently. The difference in turnover tax is 11 per cent compared to 4 per cent? Naturally, the question arises. Due to the fact that VAT "sits" on the price of goods, it is necessary to calculate 13.04 per cent rather than 15 per cent in order to deduct VAT from the price of goods or working capital. That is, for example, VAT on goods worth 600 sum is 15 per cent and not 90 sum. The actual price of goods was 522 sum, which was 'loaded' by 15 per cent and brought in 600 sum. The amount of VAT here is 78 sum. To deduct VAT from the total turnover we studied, we have to multiply the amount by 13.04 per cent instead of 15 per cent. Simply put, VAT accounts for 13.04% of total sales. In practice, the calculation of this process is as follows. The company collects all invoices for goods (or services) sold during the month. Suppose the total value of all invoices is 100 million sum.
From him: 100 million ------------- 115%
Х ------------- 15%
x = (100 * 15%) / (115%) = 13.04 million are recorded as "VAT" in these accounts. This is the amount of VAT paid to the budget on the report. Then, in turn, invoices are collected for products (raw materials, services) received by the company. The raw materials purchased here can range from energy costs to other services. The amount of VAT shown on these invoices is added up and deducted from the amount of VAT payable to the budget calculated above. That is, for example, if in the same month the company purchased raw materials and services for 80 million sum, its value added tax would be 10.43 million sum. Thus, the amount of VAT payable to the budget in that month is 13.04-10.43 = 2.61 million sum. The report will be submitted for the same amount.
Although there is no such possibility for legal entities with an annual turnover of more than 1 billion sum, a comparison should be made to determine whether the tax burden will increase compared to last year. For example, in the above case, if the company was a 'turnover taxpayer', it would pay 100 million * 4% = 4.0 million sum and for VAT it would pay 2.61 million sum. (Of course, this is a burden that we have not forgotten that a VAT payer has other taxes such as income tax, property tax, which now requires a separate topic and a separate calculation).
However, the tax burden on VAT payers may also increase. Because a company may buy raw materials without value added tax, in which case the tax burden will be several times higher than before. In other words, in order to know which one is preferable, each company should consider the origin of its activities, costs and revenues, and which taxpayers other companies cooperate with. According to the calculation, it would be more profitable to become a VAT payer voluntarily, even with a turnover of less than USD 1 billion, if the VAT payer reduces the tax costs.
Benefits of being VAT payer:

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  If your company is involved in the wholesale sale of imported products, it is more efficient to operate under standard VAT. This is because you still pay VAT on most imported products when you clear customs. This amount will be reflected on your tax return and will reduce your payment.
  
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  For the same reason, even if you are involved in production using imported raw materials, the VAT system will be more efficient than the 'turnover tax'. But now, as in some industries, if you have customs exemptions on raw materials, you can stay in 'turnover tax'. Since you don't pay VAT because you are exempt from customs duties, the State Tax Inspectorate charges you full VAT. So you end up with no privileges.
  
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  Goods exported in foreign currency are subject to VAT at 0%. For example, if the export of goods is 8000 USD, then 8000 USD * 0% = 0 amount is the amount of VAT paid to the budget. The total amount of invoices received from suppliers is 5 million sum. The amount of VAT paid to the budget is 0-5 000 000 = -5 000 000 sum, and the state will return this money to you. This will be financial assistance to business entities in the further development of their economic activities. On August 24, 2021 the President adopted Resolution No. PP-5231 "On Improving the Management of Value Added Tax". According to the decree, starting from October 1, 2021, the amount of value added tax payable on goods actually received and used for exporting goods will be taken into account irrespective of foreign currency receipt in the taxpayer's current account in the Republic of Uzbekistan.
  
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  VAT is budget money. When you pay tax by the 20th of the following month, you are effectively using an interest-free loan from the date of receipt of money from the consumer to the date VAT is remitted to the budget. If you extend this period to such an extent that the tax is paid quarterly, the term of the interest free loan will increase by a factor of 2 to 3. A similar procedure was applied last year in Uzbekistan. Starting from April 2020, VAT payers with a turnover of not more than 1 billion sum on sales of goods (services) began to pay VAT quarterly. This will increase the working capital of enterprises, reduce their need for credit resources and save 10 billion sum on repayment of bank loans.
  

Revenues from Value-added Taxes (VAT) make up a significant share of total tax revenues for many countries. The COVID-19 crisis has impacted tax policies in several ways, and VAT have also been affected both by reduced revenues, temporary carveouts and exemptions, and payment deferrals. The various lockdowns and general reduction in travel and consumption outside of homes have led to a collapse in VAT revenues. The main force behind reduced VAT revenues is lower levels of consumer spending. Other contributing factors were temporary VAT payment deferrals and reduced rates and exemptions. The deferrals allowed businesses more time frame to pay their VAT liabilities, and the other policy changes gave tax relief to certain types of consumption. Germany reduced its standard and reduced VAT rates of 19 percent and 7 percent to 16 percent and 5 percent for the second half of 2020, respectively. The European Union waived VAT on imports of protective equipment, testing kits, ventilators, and other medical supplies through the end of April 2021[5].