Value-added tax

VAT is a tax on consumption and an important source of revenue for the state. It is paid by consumers but levied on businesses.

The price that customers pay for goods and services already includes value-added tax. The business selling the goods or providing the service collects the VAT and gives it to the state.

If a business has to buy other products or services (inputs) in order to produce their own goods or provide their own services, it can deduct the VAT paid for them from the VAT it has received from its customers and has to send to the state. This is called an input tax deduction.