Value added tax (VAT),
Definition of Value added tax (VAT):
Indirect tax on the domestic consumption of goods and services, except those that are zero-rated (such as food and essential drugs) or are otherwise exempt (such as exports). It is levied at each stage in the chain of production and distribution from raw materials to the final sale based on the value (price) added at each stage. It is not a cost to the producer or the distribution chain members, and whereas its full brunt is borne by the end consumer, it avoids the double taxation (tax on tax) of a direct sales tax. Introduced by the European Economic Community (now the European Union) in the 1970s.
A tax on the amount by which the value of an article has been increased at each stage of its production or distribution.
How to use Value added tax (VAT) in a sentence?
- If you want to buy a lot of a product you must know what the value added tax will be on it.
- The French and German governments have prepared a paper for the convention on the future of Europe which proposes to harmonise corporation tax and value added tax to improve the single market.
- You must factor in the value added tax on any products when you are trying to figure out their worth to your company.
- The people were subject to the value added tax which was to be expected as the state deserves some share of the business transactions.
Meaning of Value added tax (VAT) & Value added tax (VAT) Definition