A form of turnover tax allied to valued added tax. In contemporary international trade it may apply to goods which pass through two or more different countries in the course of production, collecting different rates of tax in each; though storage in bonded warehouses may offset its effect by exempting the goods from tax in the country where they are bonded. It follows from this that goods produced in a country where the V.A.T. is low may be cheaper to the ultimate consumer than goods passing through a variety of tax sysms. It is also used as a synonym for turnover tax though, as can be seen from the above, it is not an exact synonym.
Reference: The Penguin Business Dictionary, 3rd edt.