If I have a business that doesn’t make money, can I still buy thing at the price excluding VAT, or does it not work that way?
In: Economics
VAT doesn’t really care about profitability – VAT cares about how much value you add as your part of the transaction.
So, if you buy a widget from the widget supplier for $5 and sell it in your store for $7, you added $2 worth of value and you pay VAT on the $2. Even if you are losing money operating your business, you still made $2 in gross profit on that particular sale, so you owe the VATman.
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