6 OUTPUT VAT
Output VAT payable Sales consideration x tax rate
The sales consideration includes the sales value plus any additional charges such as commissions, incentive bonus, interest on overdue payment, packaging charges, etc. but excludes:
The output VAT itself;
Consumption tax withheld on processing of consumer goods;
Disbursement of freight charges if (i) the freight invoices was issued in name of the purchaser and (ii) the invoices was handed over by the taxpayer to the purchaser.
Those sales discounts that specified on the same VAT invoice of a sales transaction.

7 USED ASSETS
For used yachts, motorcycles, and motor vehicles, it is exempted if the selling price is lower than the original cost. However if the selling price is more than the original cost or the taxpayer engages in the business of used yachts, motorcycles and motor vehicles, the tax rate is 4% with a half reduction (i.e. effectively 2%).
For other type of assets, it is exempted if the following 3 conditions are satisfied. Otherwise, 4% tax rate with a half reduction (i.e. effectively 2%) is applied for both normal rate and small-rate taxpayers.
The assets is listed on the fixed assets register of the enterprises;
The assets is treated as fixed assets and used in the past;
The sales consideration is lower than the original cost.
An normal rate taxpayer enterprise sold its self-used two vehicles and obtain sales income 300,000 dollars (original value 285,000 dollars) and 225,000 dollars (original value 270,000 dollars) respectively; at the same time sold self-used equipment and obtain sales income 120,000 dollars (original value 105,000 dollars). Calculate the value added tax for the enterprise.
For the two vehicles:
1st car: Higher than the original cost:
2¡¯ car: Lower than the original cost: exempted
For the equipment:
Since the selling price of the equipment exceeds its original value, it is required to pay: 4% x50%x 120,000/(1 +4%)2,307.69

8 INPUT VAT
Input VAT is the tax paid by the seller to the government on behalf of the buyer that included in purchase consideration. The input VAT can be used to setoff the output VAT and in order to setoff, a special VAT invoices must be obtained from the seller or a payment certificate from the custom duty after the importation. Only normal rate taxpayer can obtain the blank VAT invoices from the tax bureau and issue them to their buyer. Small-scale taxpayers can only use ordinary invoices. In other word, only the buyer who is a general VAT taxpayer purchases their need from the normal rate taxpayer can claim the buyer¡¯s input VAT. However, the following are special cases that it can be offset without VAT invoices:
(1) The normal rate taxpayer purchase the agricultural products from the farmer or the small-scale taxpayer, 13% (effective form 2002.1.1.) of the purchase cost can be treated as input VAT;
(2) The normal rate taxpayer pays for the freight cost for purchase and sales, 7 % of the freight cost (excluding handling cost, insurance, commission, etc. that paid by the taxpayer) can be treated as input VAT;
(3) The normal rate taxpayer engages in a business of used articles can claim 10% of the purchase cost of the used articles as input VAT.
@An enterprise engage in production of goods and purchase the agricultural products from the small-scale taxpayer 150,000 and pay for the transportation fee 15,000 dollars, insurance fee 6,000 dollars. Also it purchases used articles for 30,000.
Since the enterprise is not the normal rate taxpayer engages in a business of used article, therefore, used articles cannot have input VAT. Therefore:
Input VAT for the month = 150,000 x 13% + 150,000 x 7% = 20,550 dollars
8.1 Timing for input VAT to be deductible
For manufacturing enterprise, the goods must be examined and stored into the buyer¡¯s warehouse. For trading enterprise, the goods must be fully paid. 8.2 Non-deductible input VAT
The general rule is that the VAT invoices (a special kind of invoices) must be obtained from the seller for the input VAT to be deductible. However for the following cases, it is non-deductible even the invoices is obtained:
(1) The purchase item is for the use of fixed asset;
(2) The purchase of goods or services that used for non-VAT taxable item (i.e. those activities that subject to business tax);
(3) The purchase of goods or services that used for exempt item;
(4) The purchase of goods or services for the purchase of staff welfare or personal consumption;
(5) The loss of purchased goods from the extraordinary event (i.e. input VAT on goods losses due to natural disasters or stolen, etc.);
(6) The loss of finished goods and work in progress from the purchased goods or services in the extraordinary events.
An enterprise engages both in taxable activities and non-table activities shall account separately for the input VAT of the related purchases of goods and services. Without accurate accounting and supporting for the separation, the following formula should be used to determine the non-deductible VAT:
Non-recoverable input VAT = Input VAT x Turnover of non-taxable activities I Total turnover
The non-deductible VAT should be transferred out from the input VAT and treated as expenses in the income statement.