Value added tax (VAT) is a tax which consumers pay on almost all goods and services.
For businesses and organisations which are required to pay VAT to the State, VAT is generally not an expense. As a business, you must pay VAT on your purchases, but you will usually be entitled to a deduction for the tax.
What is output VAT?
‘Output VAT’ means the VAT that a business registered in the VAT Register must calculate and collect when he or she sells goods and services. You must calculate output VAT both when you sell anything to other businesses or to ordinary consumers. You must also calculate VAT if you withdraw goods or services from the business for your own use.
What is input VAT?
Input VAT is the tax you as a business pay when you purchase goods or services for your business. A business that is registered in the VAT Register can claim deductions for this tax.