Value-added tax (VAT) is a tax levied on each value-added level of a product throughout the supply chain. It is collected from each point of sale of the manufacturer until it is sold to the final consumer. This is done by allowing adjustments to the taxes paid for purchases known as “input tax credits” or also known as “input value-added tax”, while the VAT on sales is called “input value-added tax”. Ultimately, all taxes are paid by consumers.