Value Added Tax Law

Value Added Tax (VAT) is a consumption tax applied at each stage of production or sales, based on the value added at that stage. Unlike a traditional sales tax, which is only charged at the final sale, VAT collects tax incrementally as goods and services move through the supply chain. Businesses pay VAT on their purchases and collect it on their sales, remitting the difference to the government. This system helps avoid tax cascading, ensuring transparency and fairness in taxation while generating revenue for public services. It’s used by many countries around the world to streamline sales tax administration.