VAT or Value Added Tax is also an indirect tax that is levied on the consumption of goods and services. Contrary to the scenario of traditional sales taxes that are collected at the end of the final sale point, VAT is collected across the supply chain. The businesses pay VAT on their sales and claim VAT paid on their purchases and remit only the difference to the government. Such an incremental approach will minimize tax evasion, proper reporting, and will give governments a steady source of revenue. The difference between VAT and the other indirect taxes is that it will reduce the cascading effect, enhance compliance, as well as fairness, since the consumer is the final payer of the tax, and not businesses. what is vat
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