What is the purpose of VAT Returns?

The purpose of VAT Returns revolves primarily around the submission of Value Added Tax reports to tax authorities. When businesses collect VAT from their sales, they need to report this information regularly. VAT Returns typically list sales, purchases, and the VAT collected, enabling the tax authority to determine how much VAT is owed or if a refund is necessary. This reporting system ensures compliance with tax regulations and helps maintain transparency between businesses and government tax agencies.

While tax refunds, calculating liabilities, and monitoring exemptions are important aspects of VAT management, the core function of VAT Returns centers on the submission of these reports to ensure that all VAT transactions are accurately documented and adhere to legal requirements.