What is VAT and why is it needed?
Posted: Thu Feb 13, 2025 4:05 am
The main element of any business is the payment of various types of taxes. Each seller company must know what obligations it has to the state and pay them on time, avoiding delays or personal errors. Otherwise, the state will charge penalties and new fines, which will have a more negative impact on the financial situation of the business.
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However, taxation is a rather complex and not always obvious topic, which causes difficulties for entrepreneurs. Not all beginning businessmen understand when they need to pay taxes, what rules exist. Especially many questions arise with the value added tax - VAT.
In this article, we will figure out what value added tax is. We will consider who namibia phone number list should pay this tax and how to do it. We will get acquainted in more detail with the calculation and payment system, the tax rates relevant for 2025, and also find out what benefits there are and which persons are exempt from paying this tax.
Value Added Tax (VAT) is an indirect tax that is added to the cost of products at each stage of their creation and sale. In fact, such a tax is paid not by the seller, but by the buyer of the product, because it is already included in the final price of the product or service. In turn, the business simply "collects" it from consumers and later transfers it to the budget in equal shares.
Each of us has noticed a separate line for VAT on a store receipt. This is an example of a tax paid by the buyer, not the manufacturer.
Let's explain with a clear example. The VAT rate is 20%.
A flour producer has a field and a mill. He makes flour from scratch and sells it for 50 rubles per 100 grams and adds VAT of 20% (10 rubles) to the amount.
You are reading the magazine Compass - a messenger for effective and safe teamwork.
Learn more about Compass
However, taxation is a rather complex and not always obvious topic, which causes difficulties for entrepreneurs. Not all beginning businessmen understand when they need to pay taxes, what rules exist. Especially many questions arise with the value added tax - VAT.
In this article, we will figure out what value added tax is. We will consider who namibia phone number list should pay this tax and how to do it. We will get acquainted in more detail with the calculation and payment system, the tax rates relevant for 2025, and also find out what benefits there are and which persons are exempt from paying this tax.
Value Added Tax (VAT) is an indirect tax that is added to the cost of products at each stage of their creation and sale. In fact, such a tax is paid not by the seller, but by the buyer of the product, because it is already included in the final price of the product or service. In turn, the business simply "collects" it from consumers and later transfers it to the budget in equal shares.
Each of us has noticed a separate line for VAT on a store receipt. This is an example of a tax paid by the buyer, not the manufacturer.
Let's explain with a clear example. The VAT rate is 20%.
A flour producer has a field and a mill. He makes flour from scratch and sells it for 50 rubles per 100 grams and adds VAT of 20% (10 rubles) to the amount.