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NumberMatrix · May 4, 2016, 12:29 PM

I am a US resident. I therefore do not understand VAT (Value-Added Tax). Could someone help me understand it and also inform me on what type of goods or services charge VAT and what goods or services do not charge VAT?

Thank you very much.

ma0641 · May 4, 2016, 01:07 PM

Value Added Tax. It is a tax on increased value of something. See this link.
https://en.wikipedia.org/wiki/Value_added_tax

NumberMatrix · May 4, 2016, 02:10 PM

Thank you! I read a bit but I have to spend more time thoroughly reading it and understanding it.

smoothy · May 4, 2016, 03:02 PM

Like any tax... its just another way for politicians to separate you from your money forcibly. Because so many people are self employed in Europe, underreporting income is rampant... by bleeding you dry every time you buy anything... (and they are since VAT ranges from 24-28% most places) they make sure they extract as much as possible. Also Its not in lieu of income and other taxes... they still have those too.

paraclete · May 5, 2016, 06:41 AM

A value added tax is a tax added at each transaction with rebates in the intermediate stages so the end user pays the full tax. It is imposed at each point in the supply chain so taxes cannot be avoided. This is different to a sales tax which applies when the product is sold to the consumer. While it may seem the result would be the same VAT appear to collect much greater revenue at the same nominal rate of tax, What it ultimately means is that those in the black economy are taxed at some point. Consumption taxes appear to be a much broader taxing medium than income taxes.

In some countries certain commodities; food, medical services are not subject to the tax