A value-added tax is a tax on increased value of a product at each stage of production and distribution rather than just at the point of sale.

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A value-added tax is based on the value added to a product at each stage of its production and distribution. This means that it is a tax on the difference between the sale price of a product and the cost of materials and services used to produce it.

A Value-Added Tax Is a Tax on Increased Value of a Product