What is VAT?

Value Added Tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.

How it Works

Businesses collect VAT on behalf of the government.

• Output Tax: VAT charged to customers.
• Input Tax: VAT paid on business purchases.

Generally, businesses pay the difference between Output Tax and Input Tax to the tax authority.

Who Pays?

Ultimately, the final consumer bears the burden of the tax, as businesses can reclaim the VAT they pay on inputs.