A regime where one tax on turnover replaces VAT

Status: accepted

Context

Many small companies are not VAT payers. Their country puts them under a regime that replaces VAT with one tax computed on what they sold: a flat percentage of the turnover of the month or the quarter, or a rate graded by brackets of the turnover of a trailing year — the effective rate of a bracket being (base × nominal rate − deduction) / base, applied to the turnover of the period. Their invoices carry no VAT, their purchases give back none, and the return they file is the one of that tax. Such regimes exist under many names, for micro-enterprises, simplified taxpayers and small traders.

The core had none. The VAT engine computes a tax per line and the periodic return sums the lines' boxes; nothing computed a tax on a period's turnover, and nothing kept a company that pays one from charging VAT. Packs said so in their README and let such a company install the VAT payer's taxes and use none of them.

Decision

A regime is pack data; a company declares it by whole financial years; its tax is computed on the ledger's turnover and posted once per period.

turnover_tax.json declares each regime: its code and name, the kinds of tax it replaces (replaces, the closed tax_kind vocabulary), the form it is declared on — its own row of tax_report_templates, not the periodic return, with its cadence and deadline — the account its tax is an expense on, the trailing window its bracket is read over (window.months, window.includes_period, window.short), and its brackets: up_to (inclusive; left out on the last), rate, deduction, each dated and cited. There is no expression: a flat rate is one bracket with no threshold and no deduction. It compiles into turnover_tax_regimes, turnover_tax_brackets and the form, written only for a pack that carries the file.
company_tax_regimes is the company's declaration, from the first day of a financial year and to the last day of one, or open-ended. A change in the middle of a year is refused (regime_change_mid_year), two regimes on one day too (regime_overlap). Recording a regime records the cadence of its form in company_filing_periods.
Under the regime a document whose line carries a tax of a replaced kind is refused at posting, tax_replaced_by_regime: the line is booked without it.
The turnover of a period is what posted sale invoices and credit notes dated in it put on the income accounts, credit less debit, in the company's currency. A credit note lowers the turnover of its own period.
The base the bracket is read on is the turnover of the window. A company active for fewer months than the window counts — from the first month of its first financial year — has it annualised (the turnover of the months it has, times the window's months over their number; in its very first period, the period's own turnover annualised), or read as it is where the pack says as_is.
turnover_tax_return() returns the arithmetic line by line and writes nothing. post_turnover_tax() posts the tax on the regime's expense account against the account the pack names for what a declaration owes, prepares the period's filing on the regime's form and keeps the figures in turnover_tax_assessments, once per period. The tax is rounded once, at the unit of the form; the effective rate is kept unrounded.
upcoming_filings() lists the regime's form and leaves out the periodic VAT return for the periods a regime replacing VAT covers entirely.

Nothing in the schema names a country, a regime or a rate.

Consequences

No pack of this repository carries the file yet: every seed is byte for byte what it was, and every golden year is unchanged.
A company that leaves the regime in the middle of a year — because its turnover crossed a ceiling, where its law moves it out at once — cannot say so yet; the refusal names the case. Ceilings that move a company out of the regime, and the tax of the excess, are not modelled.
A company with activities on several tables of the same regime — the annexes of a regime graded by activity — is under one regime at a time; the split of turnover by activity is not modelled.
A period whose credit notes outweigh its sales owes nothing, and the difference is not carried to the next.
The filing it prepares carries no boxes: the figures are the assessment's, and filing_drift(), which reads the VAT return, does not apply to it.

A regime where one tax on turnover replaces VAT

Context

Decision

Consequences

See also