Value-added tax (VAT)

Value-Added Tax (VAT) is a taxation model wherein each company functions as a tax collector on the goods and services it sells. This system requires businesses to collect taxes from their customers on sales, while also paying taxes on the purchases they make. Subsequently, companies reconcile these transactions with tax authorities to ensure a balance between the taxes collected and the taxes paid. VAT is a consumption-based tax that aims to capture value addition at each stage of the supply chain, offering a fair and comprehensive approach to revenue collection.

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