Question

Value-added tax is ___________.

• A. an ad valorem tax on domestic final consumption collected at all stages between production and point of final sale
• B. an ad valorem tax on final consumption collected at the manufacturing level
• C. tax on final consumption collected at the consumption stage
• D. a special tax levied by the states on products from other states

Answer 1

The correct option is A an ad valorem tax on domestic final consumption collected at all stages between production and point of final sale

A value-added tax (VAT) is a type of consumption tax that is placed on a product whenever value is added at a stage of production and at the point of retail sale. In other words, its is an ad valorem tax on domestic final consumption collected at all stages between production and point of final sale.