VAT (Value Added Tax) is an indirect tax, occasionally you might also see it discussed to as a type of general feasting tax. VAT applies on most supplies of goods and services that are bought and sold. VAT is one of the common types of ingestion tax found around the world. In European countries businesses have to pay the tax to government that collects from the customers. The net result is that tax receipts to government reflect the ‘value add’ throughout the supply chain.