A tax on the estimated market value added to a product or material at each stage of its manufacture or distribution, ultimately passed on to the consumer.
A tax on the value added to goods at each stage of production, from raw materials to finished product: it is typically added to the price of the finished product and is thus an indirect tax on the consumer.
A tax based on consumption that is levied on the price of the goods being sold. VAT is commonly levied in Europe and essentially is a sales tax. However, the VAT is usually included in the price of the item. If something is selling for £35, the VAT is deducted from the £35, not calculated on top of it, in contrast to the way sales tax is calculated in the United States. Businesses also have to pay VAT on goods and services that are sold. VAT charges are criticized as being a regressive tax because they create a greater burden on poor people than wealthy people. VAT is typically larger than U.S. sales tax. In the 1990s, VAT was around 17.5% in the U.K. and 21% in France.