| Abstract [eng] |
VAT is an indirect turnover tax on goods and services, which constitutes the largest part of the state budget revenue in Lithuania, is applied at each stage of production and distribution and is proportional to the price of those goods and services. One of the essential features of VAT is deductibility. The Master‘s Thesis analyzes differences between the zero VAT rate and VAT exemption institutes in terms of the right to VAT deduction. In addition, delving into the latest practice of the CJEU and the Supreme Administrative Court of Lithuania, the most relevant problems of the practical application of these institutes and their influence on VAT deduction are highlighted. The first part of the Master‘s Thesis reviews the development of VAT taxation system, the fiscal significance of VAT in the structure of state revenue, and identifies the main features of this tax. In addition, the VAT deduction mechanism is examined in detail: the conditions necessary to exercise the right to a VAT deduction are analyzed, and a theoretical example of the implementation of a VAT deduction is presented. The second part of the Master‘s Thesis introduce the concept of VAT exemption and the main categories of VAT exemption cases. The compliance of VAT-exempt supply transactions with the conditions necessary for the implementation of the right to VAT deduction is examined in detail, as well as the mechanism of such deduction in transactions of this nature and in cases of mixed activities. Finally, relevant problematic aspects of the application of VAT exemption, noted when analyzing the practice of the CJEU and the Supreme Administrative Court of Lithuania, are highlighted, their influence on VAT deduction is reviewed, and proposals that may help reduce the scale of the identified problems are presented. The third part of the Master‘s thesis formulates the concept of a zero VAT rate and presents the main categories of cases of application of a zero VAT rate. The compliance of transactions subject to a zero VAT rate with the conditions necessary for the implementation of the right to VAT deduction, the deduction mechanism in the case of such transactions is analyzed in detail. By delving into the practice of the CJEU and the Supreme Administrative Court of Lithuania, the most relevant issues related to the application of the zero VAT rate, their impact on VAT deduction are highlighted and proposals that may help reduce its scale are presented. |
