Value Added Tax (VAT) Calculator

What is Value Added Tax (VAT)?

Value Added Tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT that the user pays is on the cost of the product, less any of the costs of materials used in the product that have already been taxed.

The VAT Formula

The formula for calculating VAT is:

\[VAT = Price \times \frac{VAT Rate}{100}\] \[Total Price = Price + VAT\]

Where:

• VAT = The amount of Value Added Tax
• Price = The price of the product before VAT
• VAT Rate = The percentage rate of VAT
• Total Price = The final price including VAT

Step-by-Step VAT Calculation

1. Identify the price of the product before VAT and the VAT rate.
2. Convert the VAT rate to a decimal by dividing by 100.
3. Multiply the price by the VAT rate (in decimal form) to get the VAT amount.
4. Add the VAT amount to the original price to get the total price including VAT.

Example Calculation

Let's calculate the VAT for a product priced at $100 with a VAT rate of 20%:

1. Price = $100, VAT Rate = 20%
2. VAT = $100 × (20 ÷ 100) = $20
3. Total Price = $100 + $20 = $120

Visual Representation

The green portion represents the original price ($100), and the blue portion represents the VAT amount ($20).