Who is the primary sufferer of VAT costs?

The end consumers are considered the primary sufferers of VAT costs because they ultimately bear the financial burden of the tax. VAT, or Value Added Tax, is a consumption tax that is applied to the final sale of goods and services. Although businesses may collect and remit VAT to the government, they do so on behalf of the consumer.

When a VAT-registered trader sells a product or service, the price includes VAT, and this cost is passed on to the consumer. As a result, consumers pay the full price that includes the tax, making them the individuals who ultimately experience the increase in costs due to VAT.

While VAT-registered traders collect the tax and businesses may feel the impact of VAT in terms of compliance costs or cash flow issues, they do not directly suffer the economic burden in the same manner as consumers do. Therefore, the end consumers are the ones who effectively face the cost of VAT as part of their purchase price.