b. Impact and Incidence of Tax

Impact and incidence of tax

The impact of VAT is on the seller because it is the one who is statutorily liable for the payment of the tax. However, in the case of importation, the importer is the one liable for VAT.

The incidence of the tax, on the other hand, is on the final consumer where the tax comes to rest. VAT is an indirect tax which may be shifted or passed on to the buyer, transferee or lessee of goods, properties or services. (Sacdalan-Casasola)

VAT is an indirect tax levied on goods and services; not on persons, and ultimately paid by consumers in the form of higher prices.