Page 26 - F1 Integrated Workbook STUDENT 2018
P. 26
Chapter 1
7.1 More detail on VAT
Students may be required to answer calculation style questions on VAT in their
examination.
VAT is charged each time a component or product is sold but the government allows
businesses to claim back all the tax they have paid (input tax). The entire tax burden
is passed to the final consumer. The VAT system is used by almost all countries in
the world.
Vat payable = output tax – input tax
Output tax – VAT charged on sales to customers
Input tax – VAT paid on purchases
VAT aims to tax most business transactions which are referred to as taxable
supplies.
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