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A value-added tax (VAT or goods and services tax (GST), general consumption tax (GCT)) is a consumption tax that is levied on the value added at each stage of a product's production and distribution. VAT is similar to, and is often compared with, a sales tax.
However, according to the definition, VAT is neither progressive nor regressive, since the rate neither increases or decreases with the taxable amount. [57] [58] [59] The zero rating of food, and the permission for businesses to reclaim input VAT, have been said to mean that the government in effect subsidises the food industry. [4]
VAT is generally charged at the border, at the same time as customs duty and uses the price determined by customs. [24] However, as a result of EU administrative VAT relief, an exception called Low Value Consignment Relief is allowed on low-value shipments. VAT paid on importation is treated as input VAT in the same way as domestic purchases.
Value-added tax (VAT) is a tax on sales. It is assessed incrementally on a product or service at each stage of production and is intended to tax the value that is added by that production stage, as outlined above by unit value added.
The VAT is structured as an all-phase tax with input tax deduction. Since 1 January 2024 [ 1 ] the rates are 8.1% standard rate, 2.6% reduced rate and 3.8% special rate for lodging services. With the exception of the mail order provision ( Art. 7 Para. 3 Let. b VAT Act ), the partially revised Value Added Tax Act (VAT Act) and the partially ...
VAT that is charged by a business and paid by its customers is known as output VAT (that is, VAT on its output supplies). VAT that is paid by a business to other businesses on the supplies that it receives is known as input VAT (that is, VAT on its input supplies). A business is generally able to recover input VAT to the extent that the input ...
For a VAT and sales tax of identical rates, the total tax paid is the same, but it is paid at differing points in the process. VAT is usually administrated by requiring the company to complete a VAT return, giving details of VAT it has been charged (referred to as input tax) and VAT it has charged to others (referred to as output tax).
An indirect tax (such as a sales tax, per unit tax, value-added tax (VAT), excise tax, consumption tax, or tariff) is a tax that is levied upon goods and services before they reach the customer who ultimately pays the indirect tax as a part of market price of the good or service purchased. Alternatively, if the entity who pays taxes to the tax ...