VAT [Value Added Tax] is an indirect tax on consumption.
This is a percentage increase in the price of every item we buy and every service we receive, this model of tax unification allows for greater transparency and ease of taxation.
How do I calculate VAT?
The amount of tax is levied on the value added at each stage of the process.
For example, suppose a consumer buys a lampshade for $100. With a VAT rate of 17%, $17 would be the tax on the product.
Dividing this value by the steps it takes to get this lampshade to the consumer, we could put it this way:
|Stage||Selling Price||Value Added||VAT (17%)|
|VAT Total||$ 17,00|
VAT rate on goods and services in Africa as of 2021, by country
|Central African Republic||19%||Dec/20|
|Republic of the Congo||18.90%||Dec/21|
The importance of VAT
VAT is important because that increases the revenue of the governments in countries that actually use that system. in addition, with a VAT the amount owed to the government by is paid partially, causing less discomfort to the consumer.