Definition

Noun: A consumption tax assessed on the value added to goods and services at each stage of production or distribution. It is ultimately borne by the final consumer but collected incrementally by businesses along the supply chain.

Usage

"Value-added tax" (often abbreviated as VAT) is a standard term in economics, finance, and business. It refers to a specific type of indirect tax system. * The government increased the standard rate of value-added tax. * Businesses must register for value-added tax if their turnover exceeds a certain threshold. * The invoice clearly shows the value-added tax charged on the purchase.

Advanced Usage

• "to be subject to value-added tax": To have VAT applied.
  • Most consumer goods are subject to value-added tax.
• "value-added tax registration": The official process for a business to join the VAT system.
  • The company completed its value-added tax registration last month.
• "value-added tax return": A periodic form submitted to tax authorities detailing VAT calculations.
  • The accountant is preparing the quarterly value-added tax return.

Variants and Related Words

• VAT (noun): The common abbreviation for "value-added tax".
  • The price includes 20% VAT.
• Sales tax (noun): A similar consumption tax, but typically applied only at the final point of sale to the consumer, not incrementally.
• Goods and Services Tax (GST) (noun): A tax system similar to VAT, used in countries like Canada, Australia, and India.

Synonyms

• Consumption tax: A broad term for any tax on spending on goods and services, under which VAT is categorized.
• Indirect tax: A tax collected by an intermediary (like a shop) from the person who bears the ultimate economic burden (the consumer). VAT is a primary example.

Related Phrases

• Input VAT: The VAT a business pays on its purchases.
• Output VAT: The VAT a business charges on its sales.
• VAT threshold: The level of turnover at which a business must register for VAT.
• Zero-rated/VAT-exempt: Categories of goods or services where VAT is charged at 0% or not applied, respectively.

Noun

1. a tax levied on the difference between a commodity's price before taxes and its cost of production