VAT, profit tax and net profit on the sale of goods

VAT, profit tax and net profit on the sale of goods  

 

Question:

Hello,
I need advice on the following:
I have a manufactured item that I sell to a customer with an invoice for the amount 6677.4 VAT included.
I also have cost invoices for the goods for 4010 BGN with VAT.
My request for consultation is the following:
What VAT do I have to pay to the state?
How much is my tax?
What is left to me as a net profit?
I'll borrow you in advance and expect your answer.
Nice day.

 

Answer:

 

Hello,

If you, as a company, produce the goods, you will receive invoices with VAT when purchasing the materials for producing the goods. Depending on the period you buy the materials you need, you are entitled to a VAT credit for each period. (for example, if you bought materials for $ 1000 + $ 200 VAT in October, and in November you bought $ 2,000 + 400 levs for VAT, then in October you have a tax credit of $ 200, and in November you have more 400 leva tax credit) Suppose that in December with the purchased materials you produced goods with a sales value of 4800 leva. You sold half of them with a selling price of 2400 leva (for "clearing" and illustrating the example we assume you have no other purchases and sales in December). From the sold goods for BGN 2400 you have a realization (income from sales for tax purposes) for 2000 levs and you owe the NRA 400 leva VAT. But from the previous two months you have a tax credit of 600 BGN. This means that for December you will not be required to pay VAT and that your tax credit of 600 leva will be only 200 (with 400 leva you have covered your VAT liability in December). In January of next year you sell the remaining goods for 2400 leva. You will still have a 2000 lv conversion for 2000 and you will pay 400 leva per VAT for import. But from December you have a further 200 lev tax credit. Actually in January you have to pay 200 BGN VAT.
Or in summary - to produce the goods, you paid 600 levs VAT to suppliers of materials. After you sell the goods produced with these materials, you owe 600 BGN VAT. After deducting the VAT paid on invoices for the purchases of the materials you actually have to pay BGN 200 VAT.
By continuing with this example, up to now you are recognized as a cost of input for 3000 BGN (the value of invoiced materials for 3600 BGN in October and November minus 600 BGN tax credit for VAT). As a cost to you, you will also have to pay for staff and insurance contributions at the expense of the company (if there are employees - if you do not have it and you have produced the goods only with your personal labor as a self-insured person, then you will not be recognized as such)

Your revenue for the current year will be the value of the goods sold excluding VAT - 2400 BGN minus 400 BGN VAT = 2000 BGN

For 2014, you will not have to pay a tax because you are at a loss - costing $ 3,000, and earning $ 2,000. Next year, selling other commodities will generate $ 2,000 in revenue without having to pay for it. A $ 2,000 earned profit is reduced for tax purposes by a loss of $ 1,000 from the previous year, or you still have to pay a 10% profit tax on the amount of $ 1,000 or $ 100.

If you sell all manufactured goods in December, then the VAT bill will look like this:

Sale for BGN 4000 in revenue + BGN 800 VAT (4800 BGN the selling value of all goods) -

You deduct tax credit from October and November to the amount of BGN 600. VAT and you still have to contribute to the budget BGN 200 VAT.

You report sales revenue of $ 4,000 and costs of producing the goods $ 3,000 = $ 1,000 a profit for which you pay 10% corporation tax = $ 100

If you have any further questions, please write again.

Greetings.