Indirect taxation

By:

James Knight

James is a lead editor for Invezz, where he covers topics from across the financial world, from the stock… read more.

Updated: Aug 20, 2021

Ad disclosure

Invezz is an independent platform with the goal of helping users achieve financial freedom. In order to fund our work, we partner with advertisers who compensate us for users that Invezz refers to their services. While our reviews and assessments of each product on the site are independent and unbiased, brands may pay to appear higher up our table rankings or place ads in specific areas of the site. The order in which products and services appear on Invezz does not represent an endorsement from us, and please be aware that there may be other platforms available to you than the products and services that appear on our website. Read more about how we make money >

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.