VAT stands for Value Added Tax, and it is an indirect tax paid by consumers on all goods and services they buy. The tax is placed on products and services at each stage of the supply chain where value is added: from the production stage until the actual sale to the consumer. Each business along the production chain pays the tax on their purchases (input VAT) and charges it on their sales (output VAT). This means that eventually, the end consumer bears the cost of the tax.