VAT is a tax on transactions. VAT is not a tax on income profits or capital gains.

VAT may be due, even though no money changed hands, e.g. certain gifts of business goods.

Generally, VAT is a tax on the consumption of certain goods and services.

‘Consumers’ for VAT purposes

For the purposes of VAT, ‘consumers’ are:

(1)businesses that cannot recover input tax incurred; and

(2)individuals acting in their non-business capacity.

For them, VAT is a real cost.

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