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VAT, or Value-Added Tax, is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.

Input VAT is the value-added tax added to the price when goods are purchased or services are rendered to a business.

Output VAT is the value-added tax charged on the sale of goods or services when they are sold to customers.

A VAT invoice is a document issued by a VAT-registered business that includes the information required by law, such as the amount of VAT charged.

The VAT Registration Threshold is the annual sales figure above which a business must register for VAT.

A VAT Return is a form submitted to the tax authorities detailing the VAT collected and paid by a business for a specific period, usually quarterly.

The VAT Rate is the percentage charged on the sale of goods and services, which can vary by jurisdiction and types of products or services.

Some goods and services may be exempt from VAT, meaning no VAT is charged, and the business can’t claim back any VAT on related purchases.

Zero-Rated VAT refers to items that are taxable but the rate of VAT is 0%. Businesses can still claim back the input VAT on costs.

The Standard VAT Rate is the default rate of VAT charged on most goods and services in a country.

A Reduced VAT Rate is lower than the standard rate and is applied to certain goods and services deemed essential or beneficial, like food or energy.

The VAT Reverse Charge is a mechanism where the responsibility for reporting a VAT transaction is reversed from the seller to the buyer.

Accrual-Based VAT Accounting records VAT transactions when they are billed, not when cash is received or paid out.

Cash-Based VAT Accounting records VAT transactions only when the cash is actually received from customers or paid to suppliers.