VAT (Value Added Tax)

Value-Added Tax (VAT) is an indirect tax levied on the value added to goods and services during the course of circulation, and is widely used in most countries around the world, including the European Union, the United Kingdom, and China. In foreign trade, VAT mainly affects the import stage and local sales: at the time of import, customs usually collects import VAT on behalf of the tax authority (which is deductible), while at the time of export, a zero tax rate generally applies and a tax refund may be claimed. Use scenarios include: quotations must specify whether VAT is included, import VAT must be paid during customs clearance, and B2B transactions within the EU require a valid VAT number to avoid double taxation. Points to note: VAT rates and rules vary greatly from country to country, such as the EU standard rate of 15%-27%; enterprises need to register for a local VAT number and file returns on time, otherwise they may face fines; cross-border e-commerce (such as Amazon) often needs to handle VAT on its own. Differences from other terms: VAT is different from tariffs (tariffs are levied on the value of goods and are not deductible), and is also different from sales tax (such as in the United States, which is levied at the final retail stage and is usually not refundable). Foreign trade practitioners should accurately calculate VAT costs to avoid profit losses.