VAT taxpayers deduct the VAT paid on purchases from the VAT charged on sales; the difference is paid with the monthly VAT return. In addition to the standard rate, reduced rates apply to certain goods and services.
A refund may be claimed for VAT that cannot be deducted because of exemptions such as exports or the application of reduced rates.
Source: VAT Law No. 3065
Related terms
VAT refundRefunding to the taxpayer, in cash or by offset, VAT that cannot be recovered through deduction because of exempt transactions or reduced rates.VAT withholdingThe buyer declaring and paying all or part of the VAT on certain purchases of goods and services as the person responsible.Tax returnThe official document in which a taxpayer reports the tax base and the tax calculated to the tax administration.Advance taxTax paid in advance during the year by income and corporate taxpayers, in quarterly periods, on current-period earnings.Arm's length principleThe principle that transactions between related persons should be carried out at the prices and on the terms that would apply between independent parties with no such relationship.Capital gainGains of individuals from disposing of certain assets and rights that are subject to income tax.
Last updated: October 22, 2026 · This definition is for general information only.