It's "value added tax". If you do some business activity that increased the value of something then that increase is taxed. The benefit is that with long produ

It's "value added tax". If you do some business activity that increased the value of something then that increase is taxed. The benefit is that with long production chains involving multiple business entities you tax the places proportionally to how much they earn from that production chain. It's like income tax, but harder to dodge because you can't easily hide the sale.