VAT, GST and sales tax calculator

Most countries tax sales. The name changes, the arithmetic does not. The UK, the EU, the Gulf and much of Africa call it VAT. Australia, New Zealand, Canada, India and Singapore call it GST. The United States and Pakistan have sales tax. Whatever yours is called, a price either excludes the tax and you add it on top, or includes it and you need to find how much of it is tax. The calculator above does both at any rate, in any currency.

Adding tax to a price

Multiply the price before tax by the rate, then add the result. At 20 per cent, a 1,000 fee carries 200 of tax and comes to 1,200. As one step: total equals price times (1 plus the rate), so 1,000 times 1.2 is 1,200.

Taking tax out of a total

Divide the total by (1 plus the rate) to get the price before tax; the difference is the tax. At 20 per cent, a total of 1,200 divided by 1.2 is 1,000, so the tax inside it is 200. This is the calculation shops and freelancers get wrong most often.

Do not take the rate off the total. 20 per cent of 1,200 is 240, which would leave 960 before tax, and 960 plus 20 per cent is 1,152, not 1,200. Divide by 1.2 instead.

Finding your rate

Rates differ by country and often by product. Many countries have one standard rate and reduced rates for food, medicine, books or transport, and some exempt certain supplies entirely. In the United States, sales tax is set by states and local authorities, so the rate depends on where the sale happens. Take the rate from your tax authority's own website, not from a list on a blog, because rates change with budgets.

Within the European Union, member states set their own VAT rates, with a standard rate of at least 15 per cent; the European Commission publishes the current rates. European Commission, VAT rates

For the UAE, Saudi Arabia, Pakistan and Indonesia, Invoicora has calculators with the official rates already set, each linked to the authority that publishes them. They are listed under By country at the foot of every page.

Rounding

Tax is rounded to the smallest unit of the currency: cents, pence, fils, paise. The calculator rounds once, at the end, so the price before tax and the tax always add up exactly to the total. Currencies without decimals, such as the Japanese yen, are rounded to whole units, and the three-decimal currencies of Kuwait, Bahrain, Oman and Jordan to the thousandth.

Putting the tax on an invoice

1. Show the price before tax for each line, or for the whole invoice.
2. Name the tax and its rate on its own line: VAT 20%, GST 10%, sales tax 8.25%.
3. Show the tax amount and the total including it.
4. If you are registered for the tax, add your tax registration number, and your client's where the law asks for it.

The invoice generator does this for you: choose your currency, type the tax name and rate once, and every line, total and PDF follows. It runs in your browser, so nothing you type is uploaded.