What is VAT and how is it calculated?

VAT is a consumption tax collected on the government's behalf: the tax the government charges consumers is collected through the company. So include 5% in your pricing, collect it from customers, and remit it through the return.

• Rate: 5%
• Filing: every two months, by the 15th of odd months

How is it calculated?

VAT payable = output tax − input tax − credit carried forward from the previous period

• Output tax: the 5% included in the invoices you issue
• Input tax: the 5% included in the invoices (with your tax ID) you receive
• Output 5% greater than input 5% → VAT to pay this period
• Input 5% greater than output 5% → a "carried-forward credit" that can be used until exhausted