VAT Historical Facts

VAT Historical Facts

As a concept, the Value added tax is traced back to 1918 and attributed to a certain German businessman called Wilhelm Von Siemens. The tax was first introduced by France in 1948 as a GNP-based VAT covering up to the manufacturing level and subsequently, the government replaced it with a consumption VAT in 1954.

The statement below, advocated by the International Monetary Fund (IMF), summarizes benefits of Value Added tax:

(Tuan Minh Le, 2003)

“[The VAT has become] a key source of government revenue in over 120 countries. About 4 billion people, 70 percent of the world’s population, now live in countries with a VAT, and it raises about $18 trillion in tax revenue—roughly one-quarter of all government revenue. Much of the spread of the VAT, moreover, has taken place over the last ten years. From having been largely the preserve of more developed countries in Europe and Latin America, it has become a pivotal component of the tax systems of both developing and transition economies.” (Ebrill et al., 2001. p. xi.)

Most of Europe, Australia and New Zealand are early adopters of the VAT; regional countries are also on that list namely Lebanon, Jordan and Egypt. Most of these countries rely heavily on the income generated by this tax as it is the most inelastic between its peers.

2-VAT Circulars& Legislations:



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