Differential Taxation
Definition
Under differential taxation, VAT is only charged on the difference between the purchase price and the sales price, rather than on the entire sales price. For example, if a company purchases a machine (service item) and resells it to another company, differential taxation avoids applying the full amount of sales tax to the same item more than once.
Note
In cases where the purchased item is used for private purposes or for the company's own use, the differential taxation is not applied. Before using the differential control function, familiarize yourself with the specific cases in which it may be used.