The full form of VAT is Value-Added Tax). It is a consumption tax on goods and services that is levied at each stage of the supply chain where value is added, from initial production to the final purchase by a consumer. VAT is based on consumption rather than income, and it is charged equally on every purchase. More than 160 countries use a VAT system, and it is most commonly found in the European Union). The VAT due on any sale is a percentage of the sale price, but from this, the taxable person is entitled to deduct all the tax already paid at the preceding stage, so double taxation is avoided.