Value-Added Tax (VAT)

Definition

VAT is a broad indirect-tax system used in many countries outside the United States. It becomes a practical operating issue because the questions are not just rate questions; they also involve registration thresholds, invoice rules, timing, and the classification of supplies.

Examples

• Switzerland applies different VAT rates to standard supplies and accommodation services.
• A business can need to think about VAT registration long before it worries about income-tax profitability.