Sales tax is an indirect, global tax with the highest yield. It strikes the added value as and when it is formed, it is therefore perceived according to a mechanism of split payments. The general Sales tax mechanism means that each company acts on order and on behalf of the State and is a tax collector downstream of its activity while undergoing the collection of taxes by its upstream suppliers and, possibly, the withholding of Sales tax by its customers. The Sales tax imposition implies the keeping of regular and reliable accounts and the imposition of personal income tax according to the real regime for the category of BIC or corporate tax.
The Other Options
On the other hand, liberal professions subject to the category of BNC (Non-Commercial Profits) are subject to Sales tax according to the actual regime even in the event of an option for taxation according to the so-called base flat rate regime. The same applies to rents which may be subject to Sales tax according to the actual regime even in the event of an option for the base flat rate. A visit to taxfyle.com/sales-tax-calculator is important.
The dissociation of the Sales tax regime and the income tax for BNCs and FRs illustrates the rule according to which the imposition of Sales tax applies regardless of the situation vis-à-vis other taxes.
Finally, Sales tax, which is a real and territorial tax, must be conceptually neutral.
Sales tax is an indirect, global tax with the highest yield
Sales tax is the main indirect tax on consumption
It is passed on by the taxable person to his customer and is therefore incorporated in the selling price of the products and services.
In the Sales tax collection mechanism, the seller acts at least, according to a summary analysis, as a simple tax collector. The taxable person acts by virtue of the tax law on order and on behalf of the State.
In fact, if it is rare that the taxable person acting for the benefit of the State derives an advantage from the collection, he even more often suffers a charge. Among these hidden charges and costs borne by taxable persons, it is possible to cite:
- the administrative cost of managing Sales tax
- the cash cost when Sales tax is paid back to the State before its collection or in the event of credit
- Sales tax paid on a debt that turns out to be insolvent subsequently cannot be taken back or recovered
As a result, the management of Sales tax and the risks associated with it increase the cost of transactions. But of all the potential drawbacks of Sales tax, the most dangerous drawback is its impact on the quality of competition. Indeed, when the Sales tax applies to a sector where informal activities are important, the biases of law (system of the fixed price for example) or of fact (real tax evasion that is to say escaping repression) disrupt the functioning of the market. The dysfunction thus caused by the Sales tax is proportional to the importance of the tax rate which acts as an annuity for the fraudster.