Ad Valorem Tax

Ad Valorem Tax

An ad valorem tax (Latin for "according to value") is a tax based on the value of real estate or personal property. It is more common than a specific tax, a tax based on the quantity of an item, such as cents per kilogram, regardless of price.

An ad valorem tax is typically imposed at the time of a transaction(s) (a sales tax or value-added tax (VAT)), but it may be imposed on an annual basis (real or personal property tax) or in connection with another significant event (inheritance tax, surrendering citizenship, or tariffs). In some countries stamp duty is imposed as an ad valorem tax.