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In a steady state scenario that structure of net fiscal credit in favor of the taxpayer will subsist – as figures of the example indicate - so TB results higher. It’s 10%. Final production value with VAT included is 139; it represents all values added from input production and production of the three sector stages (25+10+70+20 = 125), and the Net VAT of 14, that belongs to the Net VAT paid by input suppliers of Stage I and producers of each sector stages (5+1+7+2 = 14).18 That’s why the final sales value to consumers or households results 139 (=125+14). Once again, this result comes from the forward tax burden shifting assumption, and not by the accounting of liabilities and fiscal credits.

The following example (Case 3) shows the consolidated of both goods, that is, the Agricultural Sector restrictively defined; that is, represented by the two analyzed activities (corn and meat). TB on Agricultural Sector with the Invoice System results a little higher than the TB calculated by the Addition VAT method, which doesn’t take into account fiscal credits of VAT paid in inputs production. TB of 8,5% estimated by the Invoice System with revenue devolution of the “technical difference”, represent a simple average of the two goods’ TB (corn and meat), that is, 9% for Case 1 (Corn) and 8% for Case 2 (Meat); or 9,5% without that devolution. The difference between both goods depends on the different vertical value added structure and the incidence of intermediate consumption in each stage coming from sectors not belonging to the Agricultural Sector or due to different fiscal treatments.

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117

105

35+7

70

7

11

7

4 (5)

6% (7%)

225

205

105

100

10

21

11

10

10%

260

235

205

30

3

24

21

3

10%

200

TB=20/200=

56

39

17

TB

Final production value with VAT included is 260 - equal to the sum of both PV with VAT included, Corn (121) and Meat (139) – that accounts for all value added of input production

Case 3: Agricultural Sector production sold to domestic demand only

STAGE

STAGE I: Land labors

18

8,5 %

9%

AGRICULTURAL SECTOR (CORN AND MEAT)

Final Result without devolution of “saldo técnico” Note: decimals are omitted except in TB; little differences are due to calculus simplifications.

STAGE II: Harvest labors and Cattle feeding

STAGE III: Trading

Final Result with revenue devolution of “technical difference” (“saldo técnico”)

= 10%

PV

VAT inc VAT exc

IC

VA

T

(Addition VAT)

Invoice System

Liability F. Credit T (Net)

18 Without devolution of the “saldo técnico”, the final price is higher in 1. With devolution, the final price would be 138.

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