Interesting facts: Value Added Tax (VAT) was introduced by the European Economic Community (now the European Union) in the 1970s as a consumption tax. It is a tax on the purchase price levied each stage in the chain of production and distribution from raw materials to the final sale. For the final buyer, it is a tax on the full purchase price. For the seller, it is tax only on the "value added" by the seller to the product material or service (as the seller claims back the VAT they paid for the product). Most of the cost of collecting the tax is borne by business, rather than by the state. Value Added Taxes were introduced in part because they give sellers a direct financial stake in collecting the tax. 3. Ann buys a computer game for R650 excluding VAT. How much VAT will she pay? How much will she pay in total? 4. Lebo buys blank writable CDs in bulk. He repackages them and sells them individually. He pays R40,00 cash (including VAT) for 50 CDs. He receives a 5% co discount. For how much must he sell each CD to make a 40% profit?
