Value Added Tax

aka Sales Tax

Value added tax (VAT), or goods and services tax (GST), is a Consumption Tax levied on value added. In contrast to Sales Tax, VAT is neutral with respect to the number of passages that there are between the producer and the final consumer; where sales tax is levied on total value at each stage, the result is a cascade (downstream taxes levied on upstream taxes). A VAT is an indirect tax, in that the tax is collected from someone who does not bear the entire cost of the tax.

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