What is VAT Tax?

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vat meaning is an indirect tax charged on services and goods at every production and distribution stage. The VAT imposed on sales (output tax) and VAT on purchases (input tax) are chargeable and reclaimable respectively. The disparity is then paid to the government. This system would eliminate the problem of the double taxation and equitable collection of tax. The use of VAT tax in different countries is a proven method of generating income to the government. It is commonly reflected as a percentage and is usually added to the selling price thus one of the most common types of consumption tax.