- VAT, or Value Added Tax, is a consumption tax applied to the purchase price of goods or services.
- It’s an indirect tax collected by businesses and repaid to the government. Sales tax, on the other hand, is imposed on the sale of goods and services, added to the final cost, and collected by the retailer.
- VAT is collected at each stage of the supply chain, while sales tax is only collected at the final sale.
- VAT is a flat tax rate set by the national government, while sales tax rates vary between states and districts.
- VAT requires strict documentation for every transaction, making it easier to hold entities in the supply chain accountable for tax revenue, while sales tax is harder to track throughout the process.
Source Onlinevatcalculate
