An indirect tax applied to taxable supplies, collected through invoices and reported according to local rules.
Workflow quick check
Meaning in day-to-day work
Value-added tax is an indirect tax charged through taxable supplies. Businesses typically collect output VAT on sales and may recover eligible input VAT on purchases, then report the net position under the rules that apply to their registration and market.
Practical example
At an illustrative 10% rate, a taxable sale of 1,000 creates 100 of output VAT. An eligible purchase of 400 creates 40 of recoverable input VAT. Ignoring other transactions, the net payable would be 60. Actual rates and recovery rules vary.
Core formula
Net VAT payable (or recoverable) = Output VAT − Eligible input VAT
From start to close
Confirm registrations, effective dates, filing basis, and entity scope.
Classify products, services, customers, suppliers, and places of supply.
Apply effective-dated tax codes and validate invoice evidence.
Reconcile sales, purchases, adjustments, imports, and tax ledger balances.
Review, approve, file, pay or reclaim, and lock the reported period.
Recommended controls
Common mistakes
Platform context
From definition to implementation
Review the user guide, then test roles, data, exceptions, and reports in a guided demo.