The president has initiated a process to establish reciprocal tariffs for all, but plans to apply them specifically to target any perceived fiscal, regulatory or commercial barrier
Yes. Typically the VAT is due along the entire supply chain. So while every business has to declare and pay VAT for its sales, it can reduce its obligations by the VAT it already paid on the things it bought. So your 20% VAT (example value) is not in every step of the chain, but reflects the taxation of the entire chain.
Now obviously, if you import something, the importer cannot reduce his VAT obligations in for example Germany, because his price included the VAT that the exporter paid in the US.
This is already a huge problem inside the EU, where things ended effectively with most cross border businesses not being subject to VAT. So for inside the EU the exporter does not declare VAT on his export and the importer cannot reduce his VAT obligations by the VAT that wasn’t paid.
So in practice the VAT does encourage to buy a product inside the EU instead of from the US, if the price without taxes is the same. This goes both ways though.
A similar instrument to the EU one could be negotiated with the US, so that it makes cross border trade more attractive, but we know that the US has no interest in holding up its side of that bargain. Also it does come with a can of worms, as these systems often are subject to exploitation. https://en.wikipedia.org/wiki/Missing_trader_fraud
Yes. Typically the VAT is due along the entire supply chain. So while every business has to declare and pay VAT for its sales, it can reduce its obligations by the VAT it already paid on the things it bought. So your 20% VAT (example value) is not in every step of the chain, but reflects the taxation of the entire chain.
Now obviously, if you import something, the importer cannot reduce his VAT obligations in for example Germany, because his price included the VAT that the exporter paid in the US.
This is already a huge problem inside the EU, where things ended effectively with most cross border businesses not being subject to VAT. So for inside the EU the exporter does not declare VAT on his export and the importer cannot reduce his VAT obligations by the VAT that wasn’t paid.
So in practice the VAT does encourage to buy a product inside the EU instead of from the US, if the price without taxes is the same. This goes both ways though.
A similar instrument to the EU one could be negotiated with the US, so that it makes cross border trade more attractive, but we know that the US has no interest in holding up its side of that bargain. Also it does come with a can of worms, as these systems often are subject to exploitation. https://en.wikipedia.org/wiki/Missing_trader_fraud