A value added tax (VAT) is a type of consumption tax that is levied on a product whenever value is added at some stage of production and at the retail point of sale. The amount of VAT you pay is on the cost of the product, less any costs of materials used in the product that have already been taxed. VAT came into force in 1973, introduced by Lord Barber, the Chancellor under Sir Edward Heath, and was initially a simple 10% tax on almost all goods purchased by a business. It has since grown in size, complexity and popularity. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Paddy Behan, a partner at accountancy firm Vantis and considered one of the country's leading VAT specialists, said: "It's an extremely efficient tax, it's a great tax born out of a revenue raising initiative, which has conquered the world. More than 130 countries have adopted it, from Belgium to Burkina Faso. One of the few that resists is America, but academics talk about Obama introducing it there too a French idea, born in the 1950s. Britain introduced it as part of the condition for membership of the European Economic Community. All countries that joined the EEC had to replace indirect taxes with VAT. It replaced the purchase tax, which was a fairly complex system involving many different rates. At first it was a relatively low level, no more than 10%, with the exception of petrol and – briefly – household appliances, which before Britain struck for North Sea oil were considered a luxury. They were subject to a 25% tax rate. However, the Heath Government, when in opposition, had always promised that essential teams would not be subject to VAT, like books. Value added tax (VAT) is a consumption tax, meaning it is a tax on the purchase of a product or service. It is a form of taxation that focuses on how much an individual consumes as opposed to how much that individual contributes to the economy (income tax). Value added tax is paid by residents of a country. Both consumers and businesses are required to pay VAT when purchasing services or products. When a manufacturer creates a product, it is required to pay value added tax on the components purchased to create goods. The VAT that the consumer pays when the product hits the market applies to the cost of the product, minus the cost of components that have already been taxed. UAE residents will be required to pay 5% Value Added Tax (VAT). on food, water, electricity and higher education starting next year, the analyst said. Businesses will be responsible for carefully documenting business revenues and costs and associated VAT charges. Registered businesses and traders will charge VAT to all their customers at the prevailing rate and will bear VAT on goods/services purchased from suppliers. The difference between these sums is collected or paid to the State. Supplies subject to zero rates are listed in article 45 of federal law decree no. (8) of 2017 on value added tax, such as: Exports of goods and services. International transport of goods and passengers. Certain means of transport, such as trains, trams, ships, planes. First sale/rental of residential buildings. Aircraft or ships intended for rescue and air or maritime assistance. Certain precious investment metals. Certain health services and related goods and services. Some educational services and related goods and services. Your.