Scope of Tax
Value added tax is applied to each stage of the supply chain from production to the final sale of the product or service. The tax is collected from taxable businesses registered with the National Bureau for Revenue, where the final consumer pays the tax. Therefore, it is considered an indirect tax. The final consumer pays VAT when purchasing any goods or services subject to VAT. In turn, companies pay VAT collected from the final consumer to the national income agency and recover VAT paid to its suppliers.