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value-added tax

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value-added tax

–noun
an excise tax based on the value added to a product at each stage of production or distribution: value added is arrived at by subtracting from the total value of the product at the end of each production or distibution stage the value of the goods bought at its inception. Abbreviation: VAT
Also called added-value tax.


Origin:
1930–35
Dictionary.com Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2009.
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value-added tax  
n.   Abbr. VAT
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.
The American Heritage® Dictionary of the English Language, Fourth Edition
Copyright © 2009 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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Cultural Dictionary

value-added tax (VAT)

A tax on the value added to a product at each stage of its production, from raw materials to finished product. Widely employed in Europe, value-added taxes have the advantage (for governments) of raising revenue “invisibly,” that is, without appearing as taxes on the bill paid by the consumer.

The American Heritage® New Dictionary of Cultural Literacy, Third Edition
Copyright © 2005 by Houghton Mifflin Company.
Published by Houghton Mifflin Company. All rights reserved.
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Financial Dictionary

Value-Added Tax - VAT

A type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale. Value-added tax is most often used in the European Union. The amount of VAT that the user pays is the cost of the product less any of the costs of materials used in the product that have already been taxed.

Investopedia Commentary

For example when a television is built by a company in Europe the manufacturer is charged a VAT on all of the supplies they purchase for producing the television. Once the television reaches the shelf, the consumer who purchases it must pay the VAT that applies to him or her.

Related Links

Tax Tips For The Individual Investor
Five Tips for the Tax-Smart Investor

See also: Flat Tax, Sales Tax, Tax Rate, Taxes

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Legal Dictionary

Main Entry: value–ad·ded tax
Function: noun
: a tax levied at each addition of value in the processing of a raw material, the performance of a service, or the production and distribution of a commodity with each payer except the consumer reimbursed from payment at the next stage called also VAT
Merriam-Webster's Dictionary of Law, © 1996 Merriam-Webster, Inc.
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