VAT

Value Added Tax (VAT) is a type of consumption tax applied to the sale of goods and services at each stage of production and distribution. Businesses charge VAT on their sales and can reclaim the VAT they pay on their purchases. Ultimately, the end consumer bears the full cost, as VAT is included in the final purchase price. It ensures the government collects revenue gradually along the supply chain and promotes transparency, as each stage's tax is accounted for separately. Compared to other taxes, VAT is widely used internationally because it efficiently generates revenue without heavily impacting business operations.