ABSTRACT
Value-added tax (VAT) is an indirect tax, first applied in France in 1954 and subsequently introduced in the European Community (1967-73) and elsewhere around the world. According to the origin principle, the tax is applied on value added at each stage of exchange of goods and services, proportional to the extra value added to the product or service at that stage. VAT is increasingly popular because of its potential for higher revenue yields and its effect on controlling the underground or informal economy. In many countries, non-profit organizations that are exempt from other types of taxes are also exempt-entirely or partially-from VAT, although the policy rationale of VAT exemptions continues to be debated in others, in particular the United Kingdom.
