difference between vat and sales tax

The difference between VAT (Value Added Tax) and sales tax lies in how and when they are applied. Sales tax is typically charged at the point of sale to the final consumer and is only applied to the last transaction in the supply chain. In contrast, VAT is applied at each stage of production and distribution, where businesses collect VAT on their sales and can reclaim the tax they’ve paid on business-related purchases. VAT is a multi-stage tax, while sales tax is a single-point tax, making VAT more complex and widespread.