Value-Added Tax (VAT) is a consumption tax that is levied at each stage of a product’s production and distribution

VAT raises government revenues without disproportionately affecting the wealthy (as income taxes might).

It is considered simpler and more standardized than traditional sales tax.

Unlike traditional sales tax, which is assessed only at the point of purchase by the end consumer, VAT is collected at every stage along the supply chain. For example, when a product is manufactured, the manufacturer pays VAT on raw materials. When the product is sold to a retailer, the retailer pays VAT on the purchase price. Finally, when the product is sold to consumers, they pay VAT on the retail price. VAT ensures revenue generation at each step, impacting the end consumer while avoiding disproportionate burden on any particular income group. It is widely used globally, with more than 160 countries implementing VAT systems