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As I understand to make those specific product or commodity more competitive in the local markets / for local consumption, while the VAT is waived and refunded back, when such products are exported out of the country of production.
Sir I think it is based on taxing on the inputs rather than the final product to avoid double taxation. Only with VAT a commodity can be made compitative in the global market.
Value-Added Tax (VAT) is a tax on consumer spending. It is collected by VAT-registered traders on their supplies of goods and services effected within the State, for consideration, to their customers. Generally, each such trader in the chain of supply from manufacturer through to retailer charges VAT on his or her sales and is entitled to deduct from this amount the VAT paid on his or her purchases.
