VAT Calculator

This calculator helps you determine the amount of Value Added Tax (VAT) you need to pay on a purchase, or to find the price excluding VAT.

Understanding VAT and Calculating it for Your Business

Value Added Tax (VAT) is a tax levied on the consumption of goods and services. It's an indirect tax because businesses collect it from customers at the point of sale and then remit it to the tax authorities. VAT applies throughout the supply chain, with each business in the chain adding value to a product or service and paying VAT on the difference.

How to Calculate VAT as a Business Owner:

Calculating VAT involves understanding the difference between the net price (excluding VAT) and the gross price (including VAT). Here's a breakdown of the process:

VAT Rate: The first step is to identify the VAT rate applicable to your business and location. VAT rates vary by country and may even have exceptions for specific goods or services. You can find the VAT rate for your region on the government's tax authority website.

Net Price: This is the price of your product or service before VAT is added.

VAT Amount: Once you have the net price and VAT rate, you can use the following formula to calculate the VAT amount:

VAT on Purchases (Input VAT):

It's important to remember that VAT is often levied on business purchases as well. This is called Input VAT. You can claim back the Input VAT you paid on purchases when you file your VAT return, as long as the purchases are used for making taxable supplies.

VAT on Sales (Output VAT):

The VAT you collect from customers on your sales is called Output VAT. This is the VAT amount you need to calculate and remit to the tax authorities.