Value Added Tax (VAT) is a consumption tax levied on goods and services at each stage of the supply chain, where value is added. In the European Union (EU) and the United Kingdom (UK), VAT is a key component of the tax system, contributing to government revenue while also serving as a mechanism to tax consumption. Businesses are typically required to register for VAT if their taxable turnover exceeds a certain threshold, and they charge VAT on their sales. VAT rates can vary depending on the type of goods or services provided, with some items being exempt or subject to reduced rates. Ultimately, VAT is collected from the end consumer as part of the purchase price, with businesses responsible for remitting the collected VAT to tax authorities.