sales tax vs. vat

Sales tax and Value Added Tax (VAT) are both consumption taxes applied to goods and services, but they differ in how they are collected and applied. Sales Tax is a single-stage tax collected at the point of sale. It is typically applied only to the final sale of goods or services to the consumer. The seller collects the tax from the customer and remits it to the government. This tax is calculated as a percentage of the sale price and is generally applied to retail transactions VAT, on the other hand, is a multi-stage tax applied at every stage of production or distribution. It is collected by businesses at each step of the supply chain, and each business remits the tax on the value added at that stage. The end consumer ultimately bears the cost of VAT, but it is a more complex system as it involves tax credits for businesses on the tax paid for inputs.