A value-added tax (VAT) is an indirect consumption tax levied on the value added at each stage of a product's production and distribution, where businesses act as intermediaries by collecting the tax from customers and remitting it to the government. As of January 2025, 175 countries use VAT—including all OECD members except the United States—and it generates roughly a fifth of total global tax revenues, with exports typically exempted. The concept was first proposed by German industrialist Georg von Siemens in 1918, but the modern system was pioneered by Maurice Lauré in France's Ivory Coast colony in 1954, before being introduced domestically in France in 1958. Following the Neumark Report of 1962, the European Economic Community issued VAT directives in 1967, leading other member states (like Belgium, Italy, and West Germany) to adopt the model. Most countries employ an invoice-based method (with Japan as the sole exception), where sellers deduct input tax credits from their output tax, a system that is difficult to evade and does not distort firms' production decisions.