I am trying to understand vat better. They say vat has to do with concept called ' utility' . Utility is about how businesses want to make their products be very attractive to final consumers. They achieve this in four ways.
1. Form- They convert raw materials into finished products
2. Time-They try to deliver goods as fast as possible so that customers don't wait too long for their products
3.Place- They try to keep products close to customers location so that products are easily available
4. Possession-This creates utility for consumers cause they can do with products they bought whatever they want or need.
Please find enclosed link to an article about utility
People say that utility equals added value and they say that vat is applied whenever utility occurs. Do you think guys vat authorities see vat in the same way ?
It makes me confused because when customer buys from manufacturer customer benefits in two ways. He buys finished products converted from raw materials and because he buys product possession utility takes place.
1. Does it mean final consumer should be charged vat twice ?
2. When vat authorities charge sales does it mean that because consumer will own given product he should pay vat because possession utility occured ?
