That part of total tax revenue collected by means of a levy attached to expenditure on goods or services. The present principal source of indirect taxation is value added tax, but others include duties payable on imports and certain home-produced goods. Prior to the introduction of V.A.T., indirect taxation ineluded purchase tax, which was levied produced for the home market and was paid over by the manufacturer; V.A.T. is levied on the value added at each stage in the provision of goods and services for the consumer and is collected from all parties concerned, from the manufacturer to the retailer. It is essentially a sales tax in that it is only payable when goods are sold to the public and not, as with purchase tax, when the goods are made and passed to the retailer for sale; in the latter case the State receives the tax whether or not the goods are ever sold.
Reference: The Penguin Business Dictionary , 3rd edt.
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