Value Added Tax or VAT, as it is called, is the most common alternative strategy implemented by many countries to address inefficiencies within the tax system. VAT offers the opportunity to modernize the indirect tax system, to make it more efficient, appropriate and simpler. Value added tax (VAT) is a final consumption tax levied on the added value or profit margin of a good or service, at each stage of the production and distribution chain. Value added is the value that a company adds to its raw materials or purchases before selling the good/service. It's the markup on that cost price. VAT is a modern tax. It was first introduced in France in 1948. It is currently implemented in over 100 countries around the world, including the Caribbean. In 1948, France implemented it only at the manufacturing level. In 1967, Brazil implemented it at all levels and in the 1970s/80s VAT was implemented in 63 countries. According to information gathered by the VAT Implementation Office, in the Caribbean, VAT is currently in effect in: Haiti (1982), Dominican Republic (1983), Trinidad and Tobago (1990), Jamaica (1991), Barbados (1997), Belize(2006), Dominica(2006), Guyana(2007), Antigua and Barbuda(2007) and St. Vincent(2007) . VAT is currently being introduced/considered in St. Lucia and St. Kitts. It is reintroduced in Grenada. Discussions on a VAT system, in St. Lucia, began as early as 2003, on the recommendations of the ECCU Tax Reform and Administration Commission, as a strategy to manage various indirect taxes. This was followed in the 2007 budget speech of the late Sir John Compton in which he indicated the intention to introduce a value added tax system in St. Lucia. According to information collected by the VAT Implementation Project Office: VAT will not be an additional tax. VAT is a substitute tax for some indirect taxes, currently collected by the Department of Revenue and the Department of Customs and Excise. Therefore, VAT will not change the direct taxation system. However, it will replace or reduce a number of indirect taxes. Since VAT and consumption tax cannot work together, VAT will replace consumption tax. To charge VAT, a business must meet a threshold. The threshold will be the minimum amount of annual sales ($) for a company. These businesses must register with the VAT Office. Under VAT, registered businesses are called taxpayers. With VAT, business entities are classified into two groups; registered businesses and unregistered businesses. Registered businesses include individuals, partnerships, companies or other entities that supply goods and services in the course of business: pay VAT on purchases, charge VAT on sales and can claim input tax credit on purchases.