According to my understanding, VAT is the tax paid by the consumer on value added at each step. For example, suppose VAT is 10%. A farmer produces tomato and sells for $10 to a packaging company. Packaging company pays $11 ($10 + $1 VAT). The company produces canned tomatoes and sells the cans for $20. A restaurant pays $22 ($20 + $2 VAT) and makes tomato soup. Tomato soup is sold to customers for $30 but the price is $33 after VAT.
Now, VAT paid by Farmer = $1 Packaging company = $2 - $1 = $1 restaurant = $3 - $2 = $1
But The packaging company charges $2 VAT and pays $1 VAT. Does it mean they keep the extra $1? Same with restaurant. They charge $3 but only pay $1. If so wouldn't it be a huge burden to the customer?