You can use this VAT calculator to calculate the gross amount after including the VAT on the net price, or the net amount after removing the VAT from the gross amount.
VAT (value added tax) is a multipoint tax on value addition (i.e., an increase in value) that is levied/collected at the stages of manufacture, distribution, and sale, with a provision for deducting tax paid on ‘input’ against tax collected on ‘output’ at each stage before remitting to the government account. Regardless of its name, VAT is fundamentally a consumption tax.
- This calculator is easy to use and quick.
- Simply input the amount you want to include or exclude VAT in the first box of this calculator.
- The next step is to input the VAT percentage value.
- Finally, pick the option to add or deduct VAT from the dropdown list.
- Throughout the rest of the procedure, the calculator will display the gross value (inclusive VAT) or net value (excluding VAT).
Formula to Calculate VAT (Value Added Tax)
The formula to calculate the VAT is mentioned below.
The following example explains the concept of a addition of ‘VAT’ on net price of any product or item.
1. Maggie buys an mobile phone for $ 1000 and pays 7% VAT. What will be the gross amount after addition of the VAT?
- Net Amount of Mobile Phone = $1000
- VAT Amount = 7% of $ 1000 = (7/100) × 1000 = 70$
Gross Amount of the Mobile Phone after adding VAT = 1000+70 = $1070.
When Did VAT Came Into Existance?
The core concept of the value-added tax appears to have been conceived by a German businessman named Von Siemens in the 1920s. Other developments occurred in the 1920s, notably Adam’s suggestion of the invoice-credit approach (1921). Maurice Laure, “le pere de la TVA,” made a particularly significant contribution (1953, 1957).
In more than 120 nations, the VAT has become a major source of revenue. Around 4 billion people, or 70% of the world’s population, resided in nations that had a VAT, which brought in nearly $18 trillion in tax income – roughly one-quarter of all government revenue.
Furthermore, much of the VAT spread has occurred in the previous ten years. It has evolved from being essentially the province of more developed countries in Europe and Latin America to becoming a critical component of both developing and transition economie’s tax systems.