What does output VAT refer to?

Output VAT refers to the value-added tax that businesses charge on the sales of their goods and services to customers. When a business sells a product or service, it adds VAT to the selling price, which the customer pays. This amount is considered output VAT because it is collected by the business on behalf of the tax authorities and must be reported in VAT returns.

The understanding of output VAT is essential for businesses, as it needs to be accurately calculated and reported to determine the overall VAT liability. Businesses can offset this output VAT against any input VAT they have paid on their purchases, which can minimize their VAT payment obligations to the tax authorities.

In context, the other options do not accurately describe output VAT. The first choice refers to input VAT, the VAT that suppliers pay on their purchases, which is not applicable to the sales aspect. The third option describes VAT that cannot be reclaimed, which generally relates to specific scenarios or sectors rather than being a definition of output VAT. Lastly, the fourth option mentions VAT related to imports and exports, which deals with different regulatory aspects of VAT rather than defining the concept of output VAT directly.