How VAT Calculations Work
SARS has fixed the VAT rate in South Africa at 15%, so the calculator automatically adds and subtracts the VAT element of any Rand amount using the decimal representation of 15% (0.15).
Adding VAT Calculation (VAT Inclusive Calculation)
Because VAT is charged at a rate of 15%, the pre-VAT Rand value must be multiplied by 0.15 percent in order to calculate the VAT amount. This calculation yields the VAT portion’s Rand value, which must be added to the base amount to produce the VAT inclusive amount. The VAT-inclusive sum is always greater than the VAT-exempt amount.
Removing VAT Calculation (Reverse VAT Calculation)
Excluding taxes from a total can be done by multiplying 1 + VAT percentage by a number greater than one (which is 15 percent in South Africa). Divide the total cost of goods and services by 1.15 to get the total cost of goods and services that do not include VAT. The VAT amount is then worth the same in Rand as the original amount less the VAT exclusion amount. VAT-free prices are always lower than VAT-inclusive prices.
For more information on the Maths behind the calculator, check this article on how VAT calculations work