Question

Assuming a tax rate of 12%, calculate the sales tax and VAT per stage of the chain.

VAT Sales Tax

A mining company extracts raw materials and sells them to a metal processor company for 20,000 plus tax (if applicable)

Tax collected by the mining company: Tax collected by the mining company:

Tax kept by the mining company: Tax kept by the mining company:

Tax sent from mining company to gov: Tax sent from mining company to gov:

The metal processor company build wires and sells them to an electronics company for $60,000 plus tax (if applicable)

Tax collected by the metal processor company: Tax collected by the metal processor company:

Tax kept by the metal processor company: Tax kept by the metal processor company:

Tax sent from the metal processor company to gov.: Tax sent from the metal processor company to gov.:

The electronics company builds microprocessor and sells them to regular customers for $100,000 plus tax (if applicable)

Tax collected by the electronics company: Tax collected by the electronics company:

Tax kept by the electronics company: Tax kept by the electronics company:

Tax sent from the electronics company to gov.: Tax sent from the electronics company to gov.:

TOTAL TAX RECEIVED BY THE GOVERNMENT: TOTAL TAX RECEIVED BY THE GOVERNMENT:

Please explain how you came to the final answer.

Answer 1

Mining Company
Tax collected by the mining company: $20000 x 12% = $2400

Tax kept by the mining company: $0

Tax sent from mining company to gov: $2400

Metal Processor Company
Tax collected by the metal processor company: $60000 x 12% = $7200

Tax kept by the metal processor company: $2400

Tax sent from metal processor company to gov: $7200-2400 = $4800

Electronics Company
Tax collected by the electronics company: $100000 x 12% = $12000

Tax kept by the electronics company: $7200

Tax sent from electronics company to gov: $12000-7200 = $4800