The value-added tax (VAT)form of the sales tax is preferred in many developing countries because:

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A large share of VAT revenue is collected prior to the retail level because each business in the supply chain collects and remits VAT on the value added at each stage of production or distribution. This reduces the likelihood of tax evasion and improves the efficiency of tax collection in developing countries. The VAT can also be levied at a higher rate than traditional sales taxes, without imposing a burden on low-income consumers, as it is a consumption-based tax. Additionally, firms have no way to suppress information on their purchases and sales under the VAT system, which further reduces the scope for tax evasion. However, periodic audits are still necessary to ensure compliance and deter fraud.

The Value-Added Tax (VAT)form of the Sales Tax Is Preferred