Calculate VAT (Value Added Tax) amounts, find total prices including VAT, or work backwards to determine original prices before VAT. Perfect for businesses, international transactions, and financial planning.
VAT, or Value Added Tax, is a consumption tax levied on goods and services at each stage of production and distribution. Unlike sales tax, which is only applied at the final sale to consumers, VAT is collected at every step of the supply chain.
When you know the price before VAT and want to find the total price including VAT:
VAT Amount = Net Price × (VAT Rate ÷ 100)
Gross Price = Net Price + VAT Amount
Example: A product costs $100 before VAT at 20% rate. VAT = $100 × 0.20 = $20. Total price = $100 + $20 = $120.
When you know the total price including VAT and want to find the original price before VAT:
Net Price = Gross Price ÷ (1 + (VAT Rate ÷ 100))
VAT Amount = Gross Price - Net Price
Example: A product costs $120 including 20% VAT. Net price = $120 ÷ 1.20 = $100. VAT amount = $120 - $100 = $20.
| Aspect | VAT | Sales Tax |
|---|---|---|
| Collection Point | Each stage of production | Final sale to consumer |
| Business Impact | Can claim input tax credits | No input tax credits |
| Transparency | Visible at each stage | Only visible to final consumer |
| Administration | More complex, requires tracking | Simpler administration |
