My company pays VAT surplus to government every quarter since the VAT we collect on our products and services is higher then the VAT we pay for our purchases. How are we not paying it?
Then, as the company is VAT-registered what it purchases is either VAT-free or VAT paid can be deducted from the amount of VAT collected from consumers (as you said).
Bottom line: companies do not pay VAT on their own purchases, they only pass on VAT collected from consumers.
Obviously companies do make actual payments to the tax authorities but the point is that these are not from their own funds, they only effectively act as tax collectors.
And when selling products, you'll send 100% of the VAT collected from consumers to the tax office.
VAT doesn't affect a company (besides the bookkeeping).