[bald]

VAT is taxing the difference between the procurement price and the sales price (thus its name Value-Added Tax), not the revenue.

E.g., if Apple Finland procures the phone from Apple Inter Co., two separate entities, for USD 499 and sells it for USD 500, the tax would be on the USD 1, i.e., 20 cents, since Apple Finland would get the VAT paid to Apple Inter Co offset by the Finnish tax authorities.

[joefourier]

While true in a sense, that's not the best way of looking at it.

VAT is charged on the sale price of every intermediary, however businesses can claim back VAT on their purchases. In your example, Apple Inter Co. would sell the iPhone to Apple Finland for $499 + $119.76 (VAT in Finland is 24%). Apple Finland would pay $618.76, claim back $119.76, and sell the phone for $500 + $120 to the consumer, charging the consumer $620 and giving $120 to the government.

So yes, Apple Finland will have given effectively about 20 cents to the government, but the total $120 of VAT will still be paid and calculated on the end sale price, not the profit margin.