What is the difference between VAT and Sales Tax?

The VAT, or Value Added Tax, is assessed by governments on every part of the production chain. Sales tax is applied as a percentage of all retail sales. It is a value of consumption tax. The Value Added Tax is a widely used taxation model used around the world in all developed and developing markets except for the United States and state governments on various categories of retail items.

The main difference in the two systems is that governments evaluate VAT with every part of the production. The VAT is indirect tax paid to the government by the seller, rather than the consumer, who ultimately bears the burden of the charge. Sales tax is the tax that is paid to by the governing body for the sales of specific goods and services. The seller collects it at the time of the sale.