Arvonlisäverotuskin

Arvonlisäverotuskin, often referred to as VAT or Value Added Tax in English, is a consumption tax levied at each stage of the supply chain of goods and services. It is applied to the value added by each business in the production and distribution process. Consumers ultimately bear the burden of the tax as it is included in the final price of goods and services.

The tax is collected by businesses, which then remit it to the government. Businesses can typically deduct the VAT they have paid on their own purchases from the VAT they collect from their customers. This mechanism ensures that tax is only paid on the value added at each stage. There are usually different VAT rates depending on the type of good or service, with some items being zero-rated or exempt from VAT altogether.

The primary purpose of VAT is to generate revenue for the government. It is a broad-based tax, meaning it applies to a wide range of economic activities. While it can be an efficient way to collect taxes, it can also be regressive, disproportionately affecting lower-income individuals as they spend a larger percentage of their income on consumption. Debates often arise regarding the complexity of VAT administration, potential for fraud, and its impact on international trade.