Briefly explain profit margin scheme?

Can anyone please briefly expain the concept of Profit margin Scheme?

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Banan

02/08/2019 13:36:06
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Mahnaz Dana02/08/2019 14:36:58

The margin scheme was introduced for reducing the effects of double taxation with regards to the sale of second-hand goods. It operates by allowing dealers in certain second-hand goods, works of art, antiques and collectors� items to pay VAT on the difference between the sale price and the purchase price of the goods. The scheme can be chosen at the discretion of the dealers concerned. If the dealer chooses not to operate the margin scheme then the normal VAT rules apply. Therefore a taxable person filing VAT returns under profit Margin scheme has an option to calculate tax on the profit earned on a supply, instead of the sale value through Margin Scheme. The Profit Margin Scheme is applicable only on supply of certain specified goods, and not services. Thus filing VAT returns under profit margin scheme is possible only for goods.

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