eCommerce Glossary
This e-commerce glossary features over 250 essential terms every online seller should know to succeed in digital commerce.
eCommerce Glossary
This e-commerce glossary features over 250 essential terms every online seller should know to succeed in digital commerce.
VAT is a consumption tax applied at each stage of production or distribution where value is added to goods and services. It is commonly used worldwide as an indirect tax collected by businesses on behalf of the government. VAT is included in the final price paid by consumers, making it a key revenue source for many countries.
VAT operates through a multi-stage collection process:
Complex Compliance – Businesses must accurately calculate, collect, and remit VAT.
Price Impact – Increases the overall cost of goods and services for consumers.
Varied Regulations – VAT rates and rules differ by country, requiring careful management for international businesses.
VAT rates vary worldwide, typically ranging from 5% to 25%. Some countries offer reduced rates or exemptions for essential goods like food, healthcare, and education. Businesses operating internationally must understand local VAT laws to ensure compliance.
By understanding VAT, businesses can manage tax obligations efficiently while ensuring pricing strategies remain competitive.