To use the VAT calculator, input the gross amount, select the VAT calculation operation (include or exclude) the tax percentage, and then press the «Calculate» or enter the button to calculate the VAT amount.
The online VAT calculator rate is configured for UK VAT calculation by default.
The VAT calculation formula for VAT exclusion is as follows: to calculate VAT with the gross amount, divide it by 1 + VAT percentage (i.e., if it is 15%, divide by 1.15), then subtract the gross amount, multiply by -1, and round to the nearest value (including euro cents). The final two processes are optional because you can check the VAT value before doing them.
Simple transaction. To get the gross amount, multiply the net amount by 1 + VAT percentage (i.e. 1.15 if VAT is 15%). Alternatively, multiply the VAT value by the VAT %.
VAT (value-added tax) is a form of indirect consumption tax levied on the value added to products or services, specifically during different phases of the supply chain, which may include manufacture, wholesale, distribution, supply, or any other processes that add value to a product. Governments worldwide extensively employ VAT as one of their key revenue sources, accounting for around 20 per cent of worldwide tax revenue. It is the most frequent consumption tax in the world and is applied in more than 160 nations. All nations that are members of the European Union (EU) are legally compelled to implement a minimum VAT rate. Since its establishment in the 20th century, European VAT rates have continually climbed. The U.S. is the only developed country that doesn't apply VAT.
While all countries follow a fundamental VAT plan, the exact details of their respective implementation vary greatly. The VAT in one country will be different from the VAT in another. The filing methods, making payments, and paying penalties, as well as the taxes assessed on particular goods or services and whether or not the taxes apply to imports or exports, differ from country to country.
In the Philippines, seniors are exempt from paying VAT on most products and services purchased for personal consumption. In China, in addition to the usual VAT rate, there is a lower rate for specific products such as books and oils. Many countries do not levy VAT on certain commodities, such as education, food, health care, and government fees.
It is possible to use a goods and services tax, often known as a GST, to substitute a value-added tax in certain nations, such as Canada and Australia.
Furthermore, the terms are frequently used interchangeably (sometimes even with "sales tax") even though GST and VAT differ significantly in their jurisdictions. No country has both a GST and a VAT.
The following explains how VAT is charged to coffee sold by a coffee shop owner at a store that contains coffee beans roasted by a nearby roaster and beans harvested by a local farmer. Assume a 10% VAT. Each person or firm in the chain is required to complete VAT government paperwork.
Fresh coffee beans are bought from a local grower initially. If the roaster pays $5.00 per pound of fresh coffee beans and adds a VAT of $0.50 ($5.00 x 10%) For each pound of coffee beans, the farmer receives $5.50 from the roaster.
• The roaster roasts the coffee beans, costing the coffee shop owner $10.00 per pound of roasted coffee beans. The business owner must pay $11.00 per pound, including $10.00 for the roasted coffee beans and $1.00 for 10% VAT. However, because the farmer has already paid the initial $0.50 to the government, the roaster has to pay the government $0.50 in VAT.
• Each pound of roasted coffee beans can be used to sell 5 cups of coffee at $4.00 each, for $20.00. The business owner obtains $22.00 from consumers who buy his coffee, $20.00, plus $2.00 VAT for every 5 cups sold. However, because the farmer and roaster have already paid the government $1.00 in VAT, the shop owner only pays the government $1.00.
A sales tax is a consumption tax levied by the government on purchasing specific products and services. Typically, sales tax is not collected at each supply chain point. Only after the process does the seller collect sales tax from end users as they make purchases.
As shown in the preceding example, VAT works differently than sales tax and is a bit more complicated. Sales tax is only levied once when the consumer pays the vendor. VAT is superior to sales tax in terms of avoiding tax evasion or malpractice since taxes are imposed throughout the production and distribution process rather than only at the end. However, because of the elaborate paper trail that VAT necessitates, it is more expensive to administer than sales tax.
Even though VAT is levied at several points for each commodity or service, there is no double taxation (tax paid on tax). Because VAT is only charged on value-added, any tax levied in previous stages can be subtracted, eliminating a cascade impact (as illustrated in the example). Sales tax, on the other hand, can result in double taxation.
Sales tax and VAT rates are sometimes reported as a percentage of the purchase price, which is similar. Retail sales tax rates are often lower than VAT rates, ranging from 4-10% to 14-25%.
Contrary to common assumption, VAT does not tax businesses more to lessen the tax burden on the end consumer; instead, firms raise their prices to compensate. Even if there are variances in when and how frequently taxation occurs, the overall sum in tax income stays consistent.
Statistics show that the regressive character of VAT affects lower-income people more disproportionately than a sales tax. However, this can be mitigated by the effective implementation of progressive legislation, such as those seen in European VAT models.
"sales tax" and "VAT" are frequently used interchangeably for further information or to calculate sales tax.