VAT is an abbreviation which in full stand for value added tax. This is a tax which is levied by the government on a variety of goods and services provided to the citizens. All the revenue that is gained by any business for the provision of goods and services is taxable. This taxable portion of the business sales is payable to the government in form of value added tax and other taxes for raw material and other inputs. The end consumer of the goods are the ones the pay this tax. This is the main source of income in almost all countries in the world because it involves a vast amount of goods and services. Because of this great importance, the government imposes this VAT and other taxes to the end users. Click here to know about the VAT rates for goods and services.
But what is this VAT and when is it applicable? This tax is charged to most of the business transaction across the value chain in the production and service line. To have a better understanding of how VAT is imposed, w e can take an example of a fashion company. In the initial level of this chain, the supplier of raw material for products like thread and cloth will charge the manufacturer for the supplied goods and a small amount of VAT. When the manufacturer has produced the finished product, he will sell them to the retailer at a certain set price together with a certain amount VAT. Again, the retailer will sell the clothes to boutiques and shopping centre and impose another VAT. When you go to buy from the boutiques, you will buy the clothes at a certain price which is inclusive of VAT. The final buyer of the product will carry all the burden of paying the total VAT costs and each involved party in this chain will have remitted a certain amount of tax to the government. Find out about the rates of VAT now.
Each and every country has its own rates in which it charge the VAT on the goods and services. In most countries like those that in the European Union, the standard VAT is approximately 20%. Most of the commodities are exercised this percentage rate. There are some goods and services that are tax-free or attract very law tax rates. These are the goods and service that are considered to have benefit to the community. Such include sanitary hygiene goods, energy saving equipment and domestic fuel among others. All of these commodities qualify for a reduced tax rate. Discover about VAT by clicking here: https://www.huffingtonpost.co.uk/entry/fact-check-the-poor-wont-pay-the-most-for-the-vat-increase_uk_5c7e84ede4b06e0d4c22ef26.
