Value Added Tax (VAT) is a method of taxation whereby goods are taxed at each stage of production in proportion to the value added by the process of production. A feature of VAT which is worth noting is that each company in the supplier/purchaser chain, with the exception of the final consumer, in effect makes an interest-free loan to the taxation authorities, of an amount equal to its tax liability. An important reason for adopting statistics based on Added Value is that this enables a company to define, absolutely clearly and unambiguously, what it is trying to achieve in all its actions–namely, to create an income. The liability of a company to VAT can be calculated in several different ways. The main objections raised against a VAT are the excessive costs of collection, and the extra work involved for firms. Many countries, including the United States, have investigated the merits of a tax on Value Added.