Value Added Tax, commonly known as VAT, is a type of indirect tax that is imposed on the added value of goods and services at each stage of production, distribution, or sale to the consumer. That is, at every step where the product or service increases in value - from raw materials to finished product – the tax is applied. It is levoted and collected by businesses on behalf of the government and is usually included in the price paid by the customer. The purpose of VAT is to generate revenue for the government and it is paid by both businesses and individuals, with rates varying by country and product type. The final consumer bears the burden of the tax as businesses can usually reclaim the VAT they have paid whilst the product was in the intermediate stages of production and distribution.

1. When purchasing a sweater online priced at $50, a value-added tax (VAT) of 20% would result in a final cost of $60. 2. A luxurious car's manufacturing process will have VAT applied at every step, from the production of the raw materials to the finished product sold to the consumer. This tax increases the final value of the car. 3. If a company in Europe imports raw materials for $1000 and the VAT rate is 15%, they will have to pay a VAT of $150. 4. A coffee shop roasting and selling its own beans will have Value Added Tax applied twice - once when buying raw beans and then again when selling the finished product to customers. 5. VAT can be calculated on a restaurant bill: if the total meal cost is $100 and the VAT is 10% in that particular country, the final bill would be $110. This tax added to the original value of the meal is the Value Added Tax.

Added Tax (VAT) is fascinating in its worldwide diversity and prevalence. Did you know that as of 2021, more than 160 countries around the world have implemented some form of VAT, making it one of the most popular types of tax globally? The rates of VAT can vary significantly from one country to another. In some countries, the VAT rate can go above 20%! Hungary holds the record for the highest VAT rate, which stands at a whopping 27%, while countries like Singapore and Switzerland have some of the lowest rates at 7% and 7.7% respectively. United States is a major exception where instead of VAT, it has a sales tax that varies between states. How's that for a global tax puzzle!