🌍 VAT Calculator

VAT Amount = Net Price × (VAT Rate / 100)
Gross Price = Net Price + VAT Amount
Gross Price = Net Price × (1 + VAT Rate / 100)

Example: Net £100, VAT 20%
VAT = £100 × 0.20 = £20
Gross = £100 + £20 = £120

Net Price = Gross Price / (1 + VAT Rate / 100)
VAT Amount = Gross Price − Net Price

Example: Gross £120, VAT 20%
Net = £120 / 1.20 = £100
VAT = £120 − £100 = £20

❌ Wrong way: £120 × 20% = £24 (incorrect!)
✅ Right way: £120 / 1.20 − £120 = £20

VAT Rate = ((Gross / Net) − 1) × 100
VAT Rate = (VAT Amount / Net Price) × 100

Example: Net £100, Gross £125
Rate = ((125/100) − 1) × 100 = 25%

Sales Tax: collected ONLY at final retail sale
Consumer pays tax once at point of purchase
Used in USA

VAT: collected at EVERY stage of supply chain
Each business charges VAT on its sales
Each business reclaims VAT paid on purchases
Net effect: same total amount paid as sales tax
Used in UK, EU, India (GST), Australia (GST),
Canada (GST/HST), 160+ countries worldwide

Each VAT-registered business can claim back
the VAT it paid on its purchases (inputs).

VAT Payable = Output VAT − Input VAT

Example:
Manufacturer sells for £200 + £40 VAT (20%)
Manufacturer bought materials for £100 + £20 VAT
VAT payable to govt = £40 − £20 = £20

This ensures only VALUE ADDED at each stage is taxed.