Add the Value Added Tax (VAT) to the Net Amount (Without Tax).
Calculate the Gross Amount (With Tax Included).
- Gross Amount = Net Amount + Tax Amount
- Tax Amount = Tax% × Net Amount
- Gross Amount = Net Amount + Tax% × Net Amount = (1 + Tax%) × Net Amount
- In conclusion:
Gross Amount = (1 + Tax%) × Net Amount ... if we know the Net Amount
Net Amount = Gross Amount ÷ (1 + Tax%) ... if we know the Gross Amount
Examples of calculations:
- If Tax rate is 20%, (1 + Tax%) = 1 + 20% = 100/100 + 20/100 = 120/100 = 1.2 => Tax included value = 1.2 × Net Amount, and Net Amount = Tax included value ÷ 1.2;
- If Tax rate is 9%, (1 + Tax%) = 1 + 9% = 100/100 + 9/100 = 109/100 = 1.09 => Tax included value = 1.09 × Net Amount, and Net Amount = Tax included value ÷ 1.09;
- If Tax rate is 5%, (1 + Tax%) = 1 + 5% = 100/100 + 5/100 = 105/100 = 1.05 => Tax included value = 1.05 × Net Amount, and Net Amount = Tax included value ÷ 1.05;
VAT (Value Added Tax)
VAT is a tax charged of each economic agent involved in the business cycle of manufacturing of a product or providing a service within the scope of taxation. VAT, charged by the operators, is transferred to the state budget.
Value-added tax (VAT) is charged as a percentage of the value added at every level of production of a good. A cider maker would pay a percentage of the difference between what they charge for cider and what they pay for apples. Put differently; this is a tax on company's gross margins, rather than just the end user.
There are standard VAT rates in effect, for example the standard VAT rate could be 20%, and some reduced rates could be 9% and 5% respectively, but they depend on each country.