Income tax is really the same thing. A retailer sells a widget for $100 which it bought for $90, so it pays tax on the $10 in profit. The wholesaler bought the widget for $80 and sold it for $90, so it pays tax on another $10. If you go all the way back to the mine that produced the raw materials that were manufactured into the goods, the entire $100 is profit to somebody. It's the same as VAT. Calling it "profit" rather than "value added" is a distinction without a difference.
An exception as you point out is the treatment for domestic labor, but even that's just an accounting anomaly rather than a real exception -- the worker doesn't collect VAT on their "profits" (wages) but then, no deposit no return, the employer can't deduct them. The real scam is when wages aren't deductible from VAT and yet are still subject to personal income tax, which means they're being double taxed. That is one of the few things the US corporate income tax gets right.
> If you subtract all costs within that market, including labour, it suddenly becomes more attractive to hire labour in the same market where you're selling.
If you like VAT you may enjoy DBCFT.
At the end point, VAT is a revenue tax, not a profit tax. And revenue is certainly not the same thing as profit.
If you subtract all costs within that market, including labour, it suddenly becomes more attractive to hire labour in the same market where you're selling. Companies based in tax havens do not get to subtract their costs in the tax haven, which effectively means they have to pay tax on their profit in the market where they're selling rather than the country they move their profits to.
But you do have a good point that it's not really progressive in any way. It just serves our sense of justice to have companies pay their taxes in the same market they're profiting from. I guess the most elegant way to get progressive taxation, like someone else here pointed out, is UBI.