Why is VAT so complicated system?

Answer 1

There are many people, especially business owners, who would like to know why!

It's complicated by being a paid in a sort of chain, passed from supplier to customer, on both goods and services.

There are also many exemptions on a complex list of goods and services, or "zero-rate" VAT rates - the difference seeming absurd until you realise that the latter implies it would be relatively easy to change the rate - upwards.

For example, if I were to buy fish-&-chips to eat at home I would not be charged VAT on them, but I would if I ate them as a meal in the cafe section of the same chip-shop.

There are situations in which companies can claim refunds on VAT, or pass it on, paid on certain goods such as road fuel used in the course of the business.

Then the VAT rate and exemptions differ markedly from country to country within the European Union - only an organisation like the EU could invent a tax system so wilfully and bewilderingly complicated!