Value-Added Tax: Back To Basics (Part 1)

"Let's start at the very beginning – A very good place to start" are the words sung in the seminal children's movie 'The Sound of Music'.

Recent discussions with individuals in various business areas have highlighted a lack of understanding of the basic concepts and principles of value-added tax ("VAT"). The principle of 'starting at the very beginning' is thus an important principle in that it is often a lack of understanding of these basic principles which leads to an inaccurate understanding of the more complex areas of VAT. This article is the first of a two part series that therefore aims to provide a brief and basic outline of some of the more founding principles of VAT as well as to enter into brief discussions specific to certain overlooked areas of VAT.