An indirect tax levied on consumption

Value Added Tax (VAT) is the most important of the indirect taxes. It falls on sales, so its object is consumption considered as an indirect manifestation of the economic capacity of people, to the extent that it constitutes an act of disposition of income that reveals their purchasing power.

Unlike personal income tax, VAT is not linked to each person in specific and determined way, since personal and family circumstances are not considered when determining the amount to be paid, so it is the for all consumers who purchase the same product or service.

VAT levied on the supply of goods and services by businesses and professionals as well as on imports from within and outside the European Union. Now, those who interact with the Treasury and must pay the fees (taxpayers) are the business owners and professionals, who are not the ones who bear the tax in their assets. Those who really pay it, the true taxpayers, are the final consumers, who pay the tax within the price they pay for the good or service they acquire.

VAT is not applied in the Canary Islands, but rather a similar tax called the Canary Islands General Indirect Tax (IGIC). In Ceuta and Melilla, VAT is not applied, but rather another tax called the Tax on Production, Services, and Imports in Ceuta and Melilla (IPSI).