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LSDefine
Simple English definitions for legal terms
VAT
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A quick definition of VAT:
Term: VAT
Definition: VAT stands for value-added tax. It is a type of tax that the government charges on goods and services. When a business sells a product, they add VAT to the price. The customer pays the VAT, and the business gives it to the government. The government uses the money to pay for things like schools, hospitals, and roads.
A more thorough explanation:
VAT stands for value-added tax. It is a type of tax that is imposed by the government on goods and services. The tax is added to the price of the goods or services and is paid by the consumer.
- If you buy a shirt for $20 and the VAT rate is 10%, you will pay an additional $2 in tax.
- A restaurant charges VAT on the food and drinks it serves.
These examples illustrate how VAT is added to the price of goods and services. The tax is collected by the business and then paid to the government.