Value Added Tax (VAT) is one of the forms of consumer tax adopted and used in many countries.
Value-added tax is levied on a variety of economic activities and is levied on all processes that add value at various stages, including manufacturing, distribution, retail, and services.
This tax is included in the price of the product or service and is collected when the consumer purchases the product or service.
The principles of VAT are as follows.
Measurement of added value
Value added tax measures the added value at each stage when a product or service is produced and distributed. Value added is the sales at that stage minus the purchase costs. In other words, added value is the amount of new value added in the process.
Levels of taxation
VAT is levied at various levels. Typically applied in the following steps. 부가세계산기
Production: The stage where raw materials are processed to produce goods.
Distribution: At the stage of movement of manufactured goods through distribution, wholesalers and retail merchants.
Consumption: The stage at which a consumer purchases and consumes a product or service.
Tax collection: Value-added tax is collected at each stage, and this tax is paid to the tax agency at that stage. Typically, after paying taxes, businesses pass on the VAT to the next level. In this way, taxes are collected in stages and collected from consumers.
Collection from consumers
When the end consumer purchases goods or services, VAT is accumulated from all previous steps and is reflected in the final price of the goods or services. The price paid by the consumer includes value-added tax, which is paid to the national or local government.
Tax recovery and refund
Even after collecting and remitting VAT, businesses can generally recover the VAT by taking into account their own VAT expenses. This allows you to adjust accumulated taxes at an intermediate stage and avoid double taxation.
VAT is levied in many countries according to their own laws and regulations, and rates and exceptions may vary from country to country. These taxes are used to support the national budget and provide funds for public services and infrastructure development.