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Indirect Audit Techniques: Sales Price to Total Turnover Ratio and VAT Imposition on Linen Cleaning Business

    The method of price-to-sales volume ratio is used as an indirect control technique for determining business revenue. This method is applicable when a business produces similar products with a stable relationship between production factors. The tax authority must establish a correlation between inputs and outputs to relate expenses to sales volume. In this case, the tax authority found that the business uses an external laundry service, but the report lacks clarity on the correlation between expenses and services provided. The report does not clearly specify the data used to determine the frequency of pillowcase changes or the exact number washed monthly.

Source: taxheaven.gr

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.



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