ideas in action



VAT was created in 1954 by the French economist Loren Morris (Maurice Laure), Executive Director of the French Tax Administration (Direction generale des impots). First, VAT was levied (in French: taxe sur la valeur ajoutee - TVA) from major French companies in April 1954, but at a later stage - from all companies. In France, VAT is the most important source of revenue for the state, as by 2003, 112 billion Euros were received in the French Treasury from VAT, which represents approximately 45% of its total revenue. Similar is the situation in Bulgaria, where from total revenues in the budget for 2009 amounting to BGN 20,955,014,600 BGN 9,320,500,000 are VAT receipts, which makes 44.5% of all revenues.
In other countries such as Australia, Canada, New Zealand and Singapore, this tax is called “goods and services tax” (GST), and in Japan it is called "consumption tax”.

VAT is an indirect tax, i.e. it is payable to the state by a third person on whose account it is in fact. The seller pays it to the budget, but in reality it is paid by the buyer since it is included in the price of goods. VAT largely determines the price level of goods. Upon import of goods into the European Union VAT is charged, so that goods produced in the Community are equal to the equivalent imported goods.