Value Added Tax (VAT)
Value-added tax (VAT) is a consumption tax that is levied on the value added to goods and services at each stage of production and distribution. It is a tax on the final consumption of goods and services, which means that it is ultimately paid by the end consumer, although it is collected and remitted to the government by businesses.
In practice, VAT is collected by businesses that are registered for VAT with the relevant tax authority in their country. When a business sells a product or service, it adds VAT to the price and collects this tax from the customer. The business then deducts any VAT it has paid on its own purchases and expenses and pays the difference to the tax authority.
One key aspect of VAT is registrations, have a look at a more detailed explanation of VAT registrations.
Come back tomorrow for more on key aspects of VAT.
Contact Expert Accounting and Finance for further information or advice on VAT. We are happy to help.
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