Value Added Tax (or VAT) is an indirect tax. It is a type of general consumption tax. VAT is charged at each step of the ‘supply chain’. Ultimate consumers generally bear the VAT cost while Businesses collect and account for the tax, in a way acting as a tax collector on behalf of the government. A business pays the government the tax that it collects from the customers while it may also receive a refund from the government on tax that it has paid to its suppliers. The net result is that tax receipts to government reflect the ‘value add’ throughout the supply chain.
Accounting for VAT:
The Accounting for business will be totally different than the Accounting done as of now. Whereas the business who does not keep proper records will now have to prepare proper records to account for VAT payable and Receivable and the set off of the both.
VAT-registered businesses generally:
- must charge VAT on taxable goods or services they supply;
- may reclaim any VAT they’ve paid on business-related goods or services;
- keep a range of business records which will allow the government to check that they have got things right
However difficult and complicated it may seem but we are always there to help you..!!
- You can outsource us the whole accounting process along with the maintenance of the whole accounting process.