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Not quite correct - a few changes.
A '''Value Added Tax''' (VAT) is a national [[sales tax]] paid by companies based on the value they add to a [[product]] at various stages of production or [[distribution]].
A '''Value Added Tax''' (VAT) is a national [[sales tax]] paid by companies based on the value they add to a [[product]] at various stages of production or [[distribution]].
The tax is paid at each stage of production, but a credit is received for tax paid on inputs. For example, assuming a VAT rate of 10%, if a company sold it's product for $100.00 and the cost of inputs to make that product were $80.00, they would have to pay $10.00 less an input credit of $8.00 to account for the VAT paid by their suppliers.
It is controversial in [[global trade]] because many countries give domestic manufacturers rebates, or a [[VAT subsidy]], if they [[export]] those goods to other nations.
It is controversial in [[global trade]] because many countries give domestic manufacturers rebates, or a [[VAT subsidy]], if they [[export]] those goods to other nations.