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]].  It is common in Europe but has been rejected by the U.S. Congress.

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 its 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.

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 its 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.

[[category:economics]]

[[category:economics]]