Value Added Tax (VAT) is a type of consumption tax that is applied to the value added at each stage of production or distribution of goods and services. It is a tax on the value added to goods or services, not a tax on the total revenue generated. VAT is generally charged as a percentage of the price of goods or services. VAT is a common tax system used by many countries around the world, including the United Arab Emirates (UAE). In the UAE, VAT was introduced in 2018 as a means to diversify the government’s revenue sources and reduce reliance on oil revenues.