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Value added tax (VAT)

Stands for value added tax, which is a consumption tax put on a product any time value is added, except those products that are zero rated, like food and essential drugs or are in a way exempt, like exports.

The tax is levied at each stage of the supply chain, from production to sale point.

In the end the consumer pays the VAT because buyers in the early stages of production receive reimbursements for the previous VAT they have paid.

The value added tax is usually expressed as a percentage of the total cost.