What is the definition of added value?
value added tax. .
(value Added tax. vat)
It is an indirect financial tax imposed by the government on all goods and services acquired by an increase in their value. As a result of carrying out the transformational and operational processes on the raw materials, at each stage of production to reach the final product.
The tax is imposed on the additional amount of value created and added to the main product at each stage of production or distribution.
It can be considered as consumption taxes. Because it is imposed on goods regardless of the buyer’s income level, either as a certain percentage of the price of the product or service when consumed, and the value-added tax differs from the sales tax that is imposed once at the end of the supply chain when the final product is sold, while the value-added tax is imposed at each stage of Stages of production and supply chain
Value-added tax is one of the most common taxes around the world, as it is applied by about 160 countries around the world and contributes significantly to their financial revenues and constitutes a significant percentage of the total tax proceeds, even if it is not fair as it does not take into account the differences in the level of income
It appeared for the first time in France in 1954 thanks to Maurice Laurier, who set its rules, although taxes in general were already present.
The German Wilhelm von Siemens proposed the concept of value-added tax for the first time in 1918, and it was exclusively for large companies only. Germany and France were among the first countries to implement it during the First World War in the form of a general consumption tax before it was changed to become a value-added tax.
In June of the year 2016, the countries of the Gulf Cooperation Council agreed to adopt the value added tax in all the countries of the Gulf Cooperation Council, and the Kingdom of Saudi Arabia and the United Arab Emirates began to apply the value added tax at 5% as of January 1, 2018.