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An ad-valorem tax (Latin: by value) is a tax based on the value of real estate or personal property. An ad-valorem tax is typically imposed at the time of a transaction (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 or tariffs). A related concept is the fixed-rate tax, in which the tax base is the quantity of something, regardless of its price. For example, in the United Kingdom, a tax on the sale of alcoholic drinks is calculated on the quantity of alcohol in the drink, rather than its price.
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