An incremental excise that is levied on the value added at each stage of the processing of a raw material or the production and distribution of a commodity and that typically has the impact of a sales tax on the ultimate consumer
(VAT) Tax on goods and services. VAT is imposed by the European Union on member states. The tax varies from state to state. An agreed proportion of the tax money is used to fund the EU.
VAT is applied at each stage of the production of a commodity, and it is charged only on the value added at that stage. It is not levied, unlike sales tax, on the sale of the commodity itself, but at this stage the VAT paid at earlier stages of the commodity's manufacture cannot be reclaimed.