ToolNest Free online tools for business, school and everyday work.

Business Lessons

VAT and sales tax, explained simply

What VAT and sales tax are, when they apply, and how to add tax to — or remove it from — a price without confusing your customers.

VAT and sales tax are taxes added to the price of many goods and services. The rate depends on your country or region — it might be 5%, 10%, 20% or another figure. The maths works the same everywhere.

Adding tax

Take a price of $100 and a tax rate of 10%: the tax is $10 and your customer pays $110. Always show the price, the tax and the total clearly on your invoice.

Removing tax from a total

If a total of $110 already includes 10% tax, divide by 1.10 to get $100 before tax. In general: amount before tax = total ÷ (1 + rate ÷ 100).

Keep it visible

Whether you add tax on top or include it in your price, say so in writing. Clear invoices get paid faster and disputed less.

Try it now: the VAT / Tax Calculator adds or removes any rate in one tap.

Toolnest

Written by

Toolnest

Sharing practical lessons on business, study and getting everyday work done.

Put this lesson to work.

Open a free tool and apply what you just read — no account needed.

Explore free tools →

Leave a Reply

Your email address will not be published. Required fields are marked *