What is VAT?

Value Added Tax (VAT) is a consumption tax levied on the value added at each stage of the production and distribution process of goods and services.

Key characteristics of VAT include:

1. It is ultimately borne by the final consumer, although it is collected by businesses.
2. Businesses calculate their VAT liability by subtracting the input tax (VAT paid on purchases) from the output tax (VAT collected on sales).
3. Businesses that are subject to VAT must charge VAT on their taxable sales and services.
4. Certain goods and services, such as basic necessities, medical services, and educational services, are exempt from VAT.