VAT is an indirect tax that is levied on almost all goods and services consumed or used. The procedures relating to the collection, calculation and repayment of VAT obey special rules and procedures which may vary according to each country. It should be noted that nowadays, the question of VAT is still unclear in the eyes of several entrepreneurs. Given the importance of VAT in accounting as well as the smooth running of your activities, we suggest you read this article which gives you all the useful information in relation to VAT.
Definition of VAT
The value added tax (VAT) is a tax falling under the taxation of consumption. In other words, it is a tax levied on expenditure related to consumption. It is an indirect tax since its collection is not done directly by the state. It is also a special and very important tax because it is the primary source of tax revenue for most countries.
In practical terms, VAT represents the difference between a price excluding tax (HT) and a price including all taxes (TTC). This is the reason why when a company invoices a good or a service, the price takes into account the Value Added Tax. Make the perfect calculation of the same with the business calculator now.
Who pays VAT and who collects it?
The VAT is fully payable by the consumer who could be qualified as a buyer in certain cases. However, it is collected by organizations subject to VAT; These include businesses, some independent professions and some associations.
Indeed, when purchasing a product or service from a business, for example, the consumer pays VAT on the product or service in question. VAT is therefore a tax which is added to the price of all products subject to it. Only a few products or services are exempt, such as the sale of fiscal or postage stamps.
VAT is an indirect tax, which means that it is not collected directly by the state like income tax, housing tax or property tax. The company then collects VAT from the consumer on the sale of their product or service and then returns it to the state. We can therefore say that it plays an intermediary role between the consumer and the State.
What is the VAT rate?
VAT rates vary from 15% to 20% depending on the country (Congo 5.25% and 18.9%, Cameroon 19.25%, Benin 18%, Gabon 10% and 18%, Equatorial Guinea: 6% and 15 %, Central African Republic: 19%, Chad 18%).
Some products may be exempted or may be subject to reduced rates depending on the country in question.
Cases of VAT exemption
VAT exemption is a practice that can benefit certain businesses. Value added tax is not always compulsory for all businesses.
