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How does the VAT procedure function?

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The VAT procedure functions through accepting input tax credit at every level of supply.  The taxpayer, in accordance with the law and relevant rules and through maintaining accounts during every tax period, accepts paid-up VAT on purchased input or goods. The VAT chain is maintained through accepting credit at every level of supply and paying Value Added Tax on all value additions.

StagePrice on which Value Added Tax may be leviedValue Added Tax (Rate of Tax-15%)CreditNet VATAddition
Import/ input accumulation stage
Supposedly, the price at Import/ input accumulation stage- 1000/-
Output stage
Supposedly, sale price by the producer at output stage- 1500/-
Wholesale stage
Supposedly, sale price by the seller at the wholesale stage- 2000/-
Retail stage
Supposedly, sale price at the retail stage- 2500/-
Tax paid by the consumer
(on the final price- 2500/-)
Figure: VAT procedure function

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