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A tax on eligible goods and services, normally charged as a percentage of the relevant selling price under the jurisdiction’s rules.
Save concepttax, usually called VAT, is a tax on eligible goods and services. It is normally calculated as a percentage of a relevant selling price. The rules determine which transactions are taxable, which rate applies and how businesses account for the tax. The abbreviation does not identify a single worldwide rate: countries can use different rates and exemptions.
A registered business charges applicable VAT on taxable sales and accounts for it to the tax authority. It may recover eligible VAT paid on purchases under the rules. This collection system distinguishes VAT from a tax calculated only on business profit. For consumers, the relevant question is the tax included in the price of the particular goods or services they buy.
Imagine an eligible product’s taxable price rises while its VAT rate stays the same. The tax amount rises because the percentage is applied to a larger base. If the rate instead falls while the price before tax stays fixed, the tax amount falls. This example is hypothetical and does not establish that a seller will keep its pre-tax price unchanged after a real policy change.
can be set as an amount per litre, while VAT is a percentage of the applicable price. UK government guidance says VAT also applies to . Cutting VAT and cutting duty are therefore different measures, with different calculation bases. A campaign for either change is not an enacted tax reduction, and the effect on a final price also depends on commercial pricing.
UK diesel van fuel costs could rise by £2.5 billion as duty plans draw criticism