WHICH GROPE USED EXEMPTION OF VALUE ADDED TAX; MARGINAL CONSUMER OR PRODUCER

In this study, we survey directiveness of the Value added tax exemptions. To achieve this goal profitability ratios of the pharmaceutical and food companies accepted in the stock exchange, before and after implementation of the law on value added tax are examined to specify whether the implementation of this law cause a change in the relative profitability of these companies or not. Therefore, Data of 42 companies in a course of 10-year-old (5 years before and 5 years after the implementation of VAT law) is investigated by Using paired comparison test. The results of the research indicate value added tax that food companies exempt from VAT pay when they purchase goods and services due to the relatively high food demand elasticity transferred to the manufacturer but this tax in the pharmaceutical companies because the medication is an essential commodity and there is no substitute goods for it, transferred to the final consumer.

Value added tax, Profitability ratio s, Value added tax exemption, Demand elasticity