Value Added Tax (VAT) is A tax that imposes a levy on businesses at every stage of manufacturing based on the value it adds to a product. Each business in the supply chain pays its own VAT and is subsequently repaid by the next link down the chain; hence, a VAT is ultimately paid by the consumer, being the last link in the supply chain, making it comparable to a sales tax. Generally, VAT only applies to goods bought for consumption within a given country; export goods are exempt from VAT, and purchasers from other countries taking goods back home may apply for a VAT refund.