VAT Calculator

Value Added Tax (VAT) is a consumption tax applied to goods and services at each stage of production and distribution. It is the primary consumption tax in over 170 countries. Unlike US sales tax which is only applied at the final point of sale, VAT is collected at every step of the supply chain.

To add VAT, multiply the net (pre-VAT) price by the VAT rate and add it to the original price. Formula: Gross Price = Net Price × (1 + VAT Rate). For example, £100 net at 20% VAT = £100 × 1.20 = £120 gross.

To remove VAT from a gross (VAT-inclusive) price, divide by (1 + VAT Rate). Formula: Net Price = Gross Price ÷ (1 + VAT Rate). For example, £120 ÷ 1.20 = £100 net price, with £20 VAT.

VAT is collected at every stage of production and distribution, with businesses reclaiming the VAT they pay on inputs. Sales tax is only applied at the final point of sale to the consumer. Both result in the same effective tax on the end consumer, but VAT is considered more efficient and fraud-resistant.

Over 170 countries use VAT, including all EU member states, the UK, Canada (GST/HST), Australia (GST), Japan (consumption tax), and most of Asia, Africa, and Latin America. The United States is the only major economy that does not have a national VAT, relying instead on state-level sales taxes.