Value Added Tax (VAT) is primarily paid at which stage of the product lifecycle?

Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production or distribution. This means that VAT is assessed not only when a product is sold to the final consumer but throughout the entire supply chain, from development and manufacturing to distribution.

When a business produces a product, it incurs costs in materials and labor during the manufacturing process. VAT is applied to the price of these inputs, which increases the product's value. Similarly, as the product moves through distribution, any value added at that stage also incurs VAT. Each business in the supply chain pays VAT on the value it adds and can often reclaim the VAT it has paid on inputs.

Therefore, saying that VAT is primarily paid during the development, manufacturing, and distribution stages accurately reflects how the tax operates. The final consumer does pay VAT at the retail level, but this is just the last step in a continuous process where value is added, which highlights the cumulative nature of the VAT system.