A value-added tax is a tax levied on each party that adds value to a product throughout its production and distribution.

Question

Quizplus · Accepted Answer

This is the definition of a value-added tax (VAT). Each party that adds value to a product, such as manufacturers, wholesalers, and retailers, are taxed on their portion of the value they add to the product. The VAT is then passed on to the ultimate consumer in the form of a higher price.

A Value-Added Tax Is a Tax Levied on Each Party