What is a VAT registration threshold, and why does it exist?
The Value Added Tax (VAT) registration threshold is the amount of income above which a business must register for VAT. It exists so that small businesses or businesses just starting do not have to worry about the administrative burden of VAT compliance. This is one of the ways countries try to make it easy to start a business or to run a small business. Excluding small businesses from the VAT system also helps tax authorities as they can focus their resources on larger businesses that generate the bulk of governments’ VAT income.
Source Fonoa
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