How to Calculate VAT

Updated on May 31, 2022

Question:

For the debtor and creditor control accounts, how do I figure out how much VAT is included in the totals?

how to calculate VAT

Answer:

Debtors and creditors’ control accounts are the sums billed to customers. VAT (Value Added Tax) is included in the total amount owed by one party to another.

Because they are always tax inclusive, this means that the entire price includes both sales tax and VAT.

Keeping this in mind, it’s crucial to know that VAT percentages are always based on the product or service’s real sales value before VAT is added. As an example, if the VAT rate is 14 percent, that’s 14/100, or 14 percent of the total sales amount.

A mathematical value of 100% is assigned to this figure since it serves as the basis for our computations (the basis for calculating VAT).

The sum of all the debtors and creditors is 100 percent plus 14 percent, which is equivalent to 114%.

Calculating the VAT Portion from the Debtors / Creditors Total (VAT Inclusive Figure)

If you simply have the amount of debtors or creditors, you can use this figure to determine the VAT component by multiplying it by 14/114.

As an example, if our total debtors amount is R228 (R = rands; South African currency), then we conduct the following:

Total Debtors x 14/114 = R228 x 14/114 = R28 VAT portion

Calculating the Actual Sales Figure (VAT Exclusive) from the Debtors / Creditors Total (VAT Inclusive)

There are two approaches to determine the real sales total here (before VAT):

If we already have the VAT value, we can simply deduct the VAT figure from the total debtors:

It is R200 – R228 =

The total number of debtors can be multiplied by 100/114 if the VAT figure is not available.

A total of R228 times 100/114 is equal to R200.

I hope this helps and you now have a better grasp of how to compute VAT!

Please check out the comments area below for further examples of how to compute sales, VAT, or debtor or creditor totals, which includes a plethora of questions and answers about how to do so.

Best,
The founder of Accounting Basics for Students, Michael Celender

Questions and Tutorials: VAT and Settlement Discount

Go back to the Accounting Questions and Answers section of our website.

Comments for How to Calculate VAT

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How to Add VAT to Selling Price (Mark-Up)
by: Anonymous

I bought something to resell. R100 per unit is the price from the supplier. R115 is the total, including VAT (15 percent ). I paid the VAT of R15 when I bought the materials.

To which price should I apply my markup when calculating my profit margin?

Is output VAT on R100 + markup or R115 + markup taxed at the end?

Your mark-up percentage may be added to the final selling price (before VAT) in one of these ways.

In most cases, your markup is based on the purchase price (excluding VAT). As an example, if you marked up your product by 20%, you would sell it for R120 + VAT (R120). R100 divided by 1.20 equals R120.

R138 would be the complete selling price (R100 x 1.20 x 1.15). R115 x 1.20 is the same as this (the 20 percent mark-up percentage). So, as long as the 15% VAT is still included in the final selling price, it doesn’t matter if you mark it up to R100 or R115.

It is included in the final selling price and is charged as output VAT. You’ll pay R18 in VAT if you finalise the sale at R138, which is 15/115 R138. Similar to R138-R120, this is the same thing.

Please let me know if you have any further questions!

Best,
Michael C. Accounting for the Beginner

Calculating Total Excluding VAT

How can I figure out the exclusive” amount if the vat amount is known?

Using a 15% VAT as an example:

Total excluding VAT = 100/15 x VAT

Best,
Accounting basics for students.com’s founder, Michael C.

VAT Inclusive Calculation Question
by: Anonymous

If the suit costs R85,500 (VAT included), how much VAT is there?

It’s 14/114 x R85,500 that gives you R10,500.

This is based on a 14% VAT rate.

For example, if the percentage is 15%, the formula is 15/115, etc.

Best,
Accounting Basics for Students was founded by Michael C.

Calculate selling price and the VAT
by: Anonymous

For a total of R234.50, the item was sold. Be sure to include VAT when figuring up your final sale price.

Thank you so much for your help.

Let’s assume that VAT is 10%.

Start with VAT because it’s the most straightforward:
It’s R234.50 times 10/100, or R23.45

The final selling price, which includes VAT, is as follows: R234.50 + R23.45 = R257.95.

Please let me know if you have any further questions!

– Michael Celender is the author.

Finance Manager – Calculate Revenue from VAT Output
by: Tso KgPlease assist I have vat output of R630,902.10 I need to determine the revenue.

Suppose the VAT rate is 15%.

= Revenue x VAT rate = Total VAT output

V.A.T. Expenditure is calculated by multiplying revenues by 15%

So if we reverse the order of the equation, we get:

15 percent of VAT output

Total Income = VAT Output / 0.15.

R630,902.10 / 0.15 = R630,902.10 in revenue.

= $4,206,014,014

I’m hoping that makes sense.

– Michael Celender is the author.

inclusive and exclusive tax
by: arun from india

Excluding and including taxes, exactly, are you trying to say? An example of what I’m looking for would be greatly appreciated. Sincerely,

For the purposes of this definition, an amount that includes VAT is considered to be inclusive.

Consider the case of borrowers or lenders. Alternatively, the whole cost of a transaction (including VAT). Alternatively, the total amount of money that a company receives from a sale (including VAT).

The term “exclusive of tax” refers to the real sales figure or purchases total – which excludes VAT.

Joe, for example, charges $110 for his items, which includes VAT.

In cash, he gets $110. This is the all-inclusive price, which takes into account sales tax.

VAT is not included in the final sales number. It will cost $100 in this situation.

The value-added tax is ten dollars. In this case, it’s 10% ($10 for every $100 in sales value).

FYI In most cases, the VAT rate will be included in the inquiry. Just figure out if it’s an exclusive or an inclusive number.

Please let me know if you have any further questions!

Vat
by: Anonymous

Hello there,

Consulting fees came to R88,000 per month at a vat-inclusive hourly rate of R550 (inclusive). R88,000 or R88,000 excluding VAT (R77,192) should I use as my base income on my payslip?

As a paid employee, you aren’t entitled to any of the VAT that your company has to pay to the tax authorities. The company should just collect the money and then distribute it.

As a result, you should not include the VAT amount in your salary (the money paid to you). As a result, for the purposes of calculating your pay stub, I’ll use R77,192 (without VAT).

That’s good to know.

– Michael, thank you!

VAT
by: Anonymous

Monde charged R547.20 for a pair of shoes, which included VAT at a rate of 14%. If his markup percentage as a percentage of the product’s cost is 25%, what is the product’s cost price?

Gross profit earned
by: Anonymous

Anonymous made a profit of:

Hi,

The gross profit is calculated with or without VAT if I have an exclusive cost price of R2,104 and an inclusive price that is R2,398.56, and the markup rate is 60 percent.

When calculating gross profit, I need to know if VAT is included or not.

In addition, how may the aforementioned numbers be used to derive a gross margin percentage?

In advance, many thanks!

Gross profit is the sum of sales and selling costs.

Cost of Sales, on the other hand, is equal to the sum of the following:

VAT is not included in any of the above-mentioned items.

So the quick answer is that gross profit does not include VAT at any point in time.

Gross profit must be computed without accounting for sales tax.

Regarding your second query, I’m not certain of the exact amount of gross margin, but I believe it is as follows:

First, figure out what you want to sell it for.
= Cost Price + 60% mark-up = R2,104 + (R2,104 x 60%) = R3,366.40

3.366.40 – R2,104 / R3,366.40 = 0.375 = 37.5 percent of gross profit.

It’s tricky to figure out the gross margin percentage in the last question!

Please let me know if you have any further questions!

Accountancy for Students by Michael Celender

Calculating VAT
by: Anonymous

Is there a legitimate basis for including an additional 10% in the VAT value of goods?

In other words, the VAT is 10% of the purchase price.

The VAT rate of 10% IS the VAT rate.

Value added tax (VAT) is never included in the actual cost of items.

There’s a tax on your purchases since the company is required to do so. This includes the value of the products as well as any applicable VAT.

I hope that was clear!

– Michael, thank you!

Rep. of South Africa VAT
by: Anonymous

14 percent VAT on R1960 (South African Rands) in services rendered on an invoice to a customer?

If the total amount on the invoice is R1,960, then VAT is included in this number.

This is what you do:
For example, R1,960 x 14/114 Equals R241.

Is that clear?

– Michael, thank you!

Help
by: Anonymous

How do I calculate the % if I have the purchase price and the sale price?

VAT Calculation in very Simple Way
by: Chris

To put it in a nutshell, it’s that simple.

Amount paid: $4,954
VAT: a levy of 14%

All you have to do to get the sum is:

Take the percentage rate and divide it by 100.

In this case, – 14/100 = 0.14 (or simply move the decimal point 2 places from right to left)

Then

– Multiply the price of the item by the VAT decimal amount (4,954 X 0.14 = 693.56)

Four thousand nine hundred and fifty-four dollars is divided by two to arrive at 693.56.

Then

(4954 + 693.56 = 5647.56) Add together the item’s cost and the applicable VAT.

The item’s total cost, including VAT, is 5647.56.

The objective here is to be able to quickly and accurately convert a percentage rate to a decimal figure (you just need to move the decimal point 2 places from right to left)

So, 23% is equal to 0,23% is equal to 0,22% is equal to 0,10% is equal to 0,11% is equal to 0,018% is equal to 0,388%

Isn’t that easy?

Chris makes a great point. Sincerely,

Inclusive and Exclusive
by: Boitumelo

I’d like to ask a few questions about till slip before we get started.
The total cost of the item is R498.93.
First, figure out how much you owe, taking into account the 14% sales tax.
2) How much money falls under the Vat’s sole jurisdiction?

VAT Including or Excluding
by: Anonymous

If VAT is 14%, how do I know when to utilise 14/114?

When you begin with the inclusive figure of 114, use the 114 figure (cash received, debtors amount, creditors amount, etc.).

– Michael, thank you!

confussed
by: Anonymous

What do you mean when you say you’re assuming the VAT rate is 14%? Vat, on the other hand, is a whopping 14%.

VAT rates fluctuate from time to time. In addition, VAT is found in a variety of locations around the world, not just in the United States. A sales tax is a term for a comparable tax in different nations. Other nations with VAT or a sales tax have different rates than in South Africa (I believe).

Best,
Michael Celender is the author of this article.

VAT only
by: Anonymous

Hi

How do I compute the exclusive and inclusive numbers if all I have is the VAT amount of R1356.52? Getting to 10% is as simple as moving the dot, because 5% is always half of 10%.

Tx

10 percent isn’t always straightforward to compute, but it’s a lot easier than 14 percent. I’m going to assume that the VAT on the eggs is R1356.52 and that the rate is 10%. I hope that’s correct.

100/10 X R1356.52 is the exclusive amount.

The total cost is 110/10 X R1356.52 = R1356.52.

– Michael Celender is the author.

VAT Rate
by: Anonymous

My total cost for a pen, excluding VAT (14 percent), is R75. Then there’s the VAT.

The VAT is calculated as follows: R75 multiplied by a coefficient of 14.4 = R10.50.

– Michael Celender is the author.

VAT Question
by: Anonymous

The lawyer charged me R975 VAT exclusive, yet I’m getting R1,111.50 VAT inclusive here, whilst the lawyer cost me R975. So, how did we arrive at the R1,111.50 figure?

The R975 is used to calculate VAT. R975 divided by 100 = 14/100 = 14 percent VAT. 14/100 X R975 = R136.50 can be used to compute VAT. The sum of R975 and R136.50 is R1,111.50.

This can also be done by saying 114/100 X R975 = R1,111.50.

Please let me know if you have any further questions!

Best,
Michael Celender is the author of this article.

Question
by: Anonymous

To put it another way, my gross price will be 54,720 if my VAT rate is 14% and my purchase price is $48,000. There are 6,720 questions in my textbook. How did the 6,720 figure come to be?

45,000 – 3,000 = 48,000, then add VAT at 14% (then it reads) 6,720 net buying price

The total cost of the purchase is 54,720 dollars.

My best guess is that the 6,720 was arrived at by multiplying 48,000 by 14.5%.

Best,
Michael Celender is the author of this article.

Calculate VAT
by: kuhle

the total is 318.59

Excluding VAT
by: Anonymous

Dear Sir/Madam, I’d like to know how much more I’d have to pay in order to purchase a product that costs $1750 without VAT.

1,750 x (100 + VAT rate)/100 is what you need to do.

For example, if VAT is 15%, you would multiply 1750 by (100+15%/100) to arrive at 2,012.50.

– Michael Celender is the author.

Vat
by: PG

Which method of calculating VAT is correct?

Multiply by 14 and get 100 OR multiply by 14 and get 114

VAT CALCULATION
by: Anonymous

Included in the total is the value added tax of rs 468.00. However, I’m stumped as to how 468 x 13.5 percent differs from 468 x 1.135 in the equation.

How to Add On VAT
by: Rozzi

On your net amount, add a tax rate of 14 percent
In this example, 7500 x 1.14 = 8 550.00 gross/incl.

Vat 14 percent is calculated by subtracting the gross amount from the net amount: 8 550. – 7 500. = 1 051.

to get the net amount, or you already know how much VAT is and need to figure out how much is left.

One hundred and fourteen times one thousand five hundred equals seven million five hundred dollars, without any fees or charges.

either the gross sum of 8550. / 1.14 = 7500. net/excl

Work out the purchase or sale amount using the VAT amount
by: Edward

For example, if you know how much VAT you paid, but don’t know how much money you made from the sale or purchase of a product, you do this:

Suppose you paid R5,000.00 in VAT.
After multiplying R5,000.00 by 114, divide it by 14.

Therefore, R5,000.00 x 114 14 = R40,714.28

As a result, the total cost to you was R40,714.28.

Calculating VAT Backwards
by: Michael Celender

The 114th decimal place of the calculation is always included in the final price you pay. In other words, it’s the sum of the product’s purchase price (100%) plus the additional VAT (14 percent).

We use the following method to find the VAT while working backwards from the total amount paid:

14% of the total paid = 14% of R72,514.34 = R8,905.27

How Do I Calculate VAT Backwards
by: Bev

How can I figure out how much VAT I paid on a total of R72,514.34 in sales?

If only VAT amount is known
by: Anonymous

Without any further information, how can I figure out the inclusive/exclusive price? For example, if I was charged VAT of 50, what is the total amount, including VAT? Is there a VAT-exempt price?

VAT on 7500
by: Michael Celender

If the goods or service costs R7,500 in total, the VAT is calculated as follows:
R7,500 divided by 14/114 equals R921.

If the R7,500 is the pre-tax price, then the following formula works out:
R7,500 X 14/100 = 1,050 Rwh

The total cost of the goods or service, including VAT, is R8,550 (R7,500 + R1,050) in the final choice.

VAT manually
by: Anonymous

Hello everyone, I’m looking for help. How do I go about manually figuring out vat on paper? I’m getting ready to go in for an interview and I think I could use some extra preparation time.

vat calculating
by: Anonymous

How do I enter a number, say, 7500, and receive an accurate response?

answer.

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