The Value-Added Tax (VAT) Calculator can determine a price before VAT, a VAT rate, or a price that is VAT inclusive. Enter values for two out of the three available inputs to compute the third value.
A VAT (value added tax) is a type of indirect consumption tax imposed on value added to goods or services, specifically during different stages of the supply chain, which may include production, wholesale, distribution, supply, or any others that add value to a product.
This is different from sales tax, which is imposed only during the final transaction to the end consumer. Even though when, and how often taxation occurs is different between the two, the end total in taxation applied generally remains the same. Oftentimes, VAT is said to be superior to sales tax because of the provided transparency when taxation is applied meticulously during different stages, rather than as a single instance at the end. This transparency attempts to prevent tax evasion, or malpractice. Even though VAT is imposed multiple times for any good or service, double taxation (tax paid on tax) usually does not occur. Because VAT is only imposed on any value added, any tax applied during preceding stages can be deducted, preventing a cascading effect. Sales tax and VAT are similar in that rates are often expressed as percentages of price.
VAT is the most common consumption tax in the world and enforced in different ways and rates in more than 160 countries, including the U.K., India, Italy, South Korea, Sweden, and many others. Differences between countries include which goods or services are imposed at what rates, whether they apply to imports or exports, and rules on filing, payment, and penalties. To see detailed information about VAT for a specific country, please visit their government website.
A GST, or goods and services tax, can be the alternative name of VAT in some countries such as Australia and Canada. In addition, the terms are commonly used interchangeably to refer to the same thing, even though GST and VAT in their respective countries can differ tremendously. However, no country has both a GST and a VAT.