How to Calculate VAT

by Kevin
(Pretoria, South Africa)

how to calculate VAT




Control accounts for debtors and creditors are the totals charged to a customer. They are the full amounts of the sale including VAT (Value-Added Tax) that are owed from one party to another.

In other words, they are always
VAT inclusive, meaning that the figure is the total of the actual sales price plus VAT.

It's important to understand that the VAT percentage is always based on the
actual sales value of the product or service - before adding VAT. So for example, if the VAT rate is 14%, that's 14/100 of the actual sales figure.

Since the sales figure is the basis of our calculation (the basis of calculating the VAT portion), we always assign this a mathematical value of 100% when doing these calculations.

In mathematical terms, the total for debtors or creditors equals:
100% + 14% = 114%.

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

If you want to calculate the VAT portion and you only have the total of debtors or creditors, you take this last figure and multiply it by 14/114.

So, for example, if our total debtors amount owing to the business is R228 (R = rands = South African currency), then we do the following:

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

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

The actual sales figure here (excluding VAT) could be calculated in 2 ways:

1) If we have the VAT figure already, we could just take the total of the debtors, which includes VAT, and subtract the VAT figure:

R228 - R28
= R200

2) If we don't have the VAT figure, but we have the VAT rate, we could take the total debtors figure and multiply this by 100/114:

R228 x 100/114
= R200

Hope that helps and that you now have a better understanding of how to calculate VAT!

If you want more examples of how to calculate VAT or how to calculate any of the other figures like the sales figure or the debtors or creditors total, then check out the
comments section below, which has a whole bunch more questions and answers.

Michael Celender
Founder of Accounting Basics for Students

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Comments for How to Calculate VAT

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

I purchased a product for resale. Unit price from supplier is R100. Inclusive of VAT is R115 (15%). R15 input VAT paid.

1) When I add my markup do I add it to the R100 unit price or to R115?

2) And then do I charge output VAT on R100 + markup or R115 + markup?

1) When calculating the final selling price (including VAT) you can add your mark-up percentage in either of those ways.

Your mark-up is typically on the cost price (excluding VAT). So for example if you marked up your product by 20%, you would sell it at R120 + VAT. This is calculated as R100 x 1.20 = R120.

The full selling price you would charge would be R138 (R100 x 1.20 x 1.15). This is actually the same as R115 x 1.20 (the 20% mark-up percentage). So you can mark it up either way, based on the R100 or based on the R115 - as long as the 15% VAT is still included in the final selling price.

2) You charge output VAT on the final selling price - it's included in the final selling price. So if the final price is R138, your output VAT is 15/115 x R138 = R18. That's the same as R138 - R120.

Hope that helps!

Michael C.
Accounting Basics for Students

Calculating Total Excluding VAT
by: Anonymous

If the vat amount is known how do I calculate the amount {exclusive)?

Assuming VAT of 15%:

Total excl. VAT = VAT figure x 100/15

Michael C.
Founder of

VAT Inclusive Calculation Question
by: Anonymous

What is the amount of VAT if the cost of the suit is R85,500 (VAT inclusive)?

R85,500 x 14/114
= R10,500

That's assuming a VAT rate of 14%.

If it's 15% or some other number, it's x 15/115. Etc.

Michael C.
Founder of Accounting Basics for Students

Calculate selling price and the VAT
by: Anonymous

An item with a selling price of R234.50 ex VAT , was sold. Calculate both the full selling price and the VAT portion of the sale?

Appreciate your assistance.

Let's assume VAT = 10%

Start with the VAT portion, that's the simplest:
= R234.50 x 10/100
= R23.45

Now the full VAT-inclusive selling price:
= R234.50 + R23.45
= R257.95

Hope that helps!

- Michael Celender

Finance Manager - Calculate Revenue from VAT Output
by: Tso Kg

Please assist I have vat output of R630,902.10 I need to determine the revenue.

Let's say the VAT rate = 15%

VAT Output = Revenue x VAT rate

VAT Output = Revenue x 15%

So switch things around in the formula and we get:

Revenue = VAT Output / 15%

Revenue = VAT Output / 0.15

Revenue = R630,902.10 / 0.15

= R4,206,014

Hope that makes sense.

- Michael Celender

inclusive and exclusive tax
by: arun from india


Inclusive tax is referring to an amount that includes the VAT.

For example, debtors or creditors. Or the full cash paid for a purchase (including VAT). Or the full cash received for a sales (including VAT).

Exclusive of tax refers to the actual sales figure or purchases figure - which excludes VAT.

For example, Joe sells goods for $110 including VAT.

He receives $110 in cash. This is the inclusive amount - includes VAT in it.

The actual sales figure will exclude VAT. In this case it will be $100.

The VAT is $10. It's at a rate of 10% in this example ($10/$100 sales value).

FYI usually they will give you the VAT rate in the question. You just have to calculate either the exclusive or inclusive figure.

Hope that helps!

- Michael

by: Anonymous

Good Day,

I charged a vat inclusive hourly rate of R550/hr for consulting fees which totaled R88,000 for the month (inclusive). What amount do I use as my basic salary for my payslip, R88,000 or R88,000 excluding vat (R77,192)?

Your business will have to pay VAT over to the tax authorities so this VAT amount doesn't really belong to you as a salaried employee. The business should just be collecting it and then paying it over.

The VAT amount should therefore not be included in your salary (the money paid to you). So I would use the excluding vat figure of R77,192 as the salary figure for your payslip.

Hope that helps.

- Michael

by: Anonymous


Gross profit earned
by: Anonymous


If I'm given an exclusive cost price per unit of R2,104, and the inclusive price is R2,398.56, and the markup percentage is 60%, do I calculate the gross profit earned with or without VAT?



Thank you in advance!

Gross profit is made up of Sales and Cost of Sales.

And Cost of Sales = Opening Inventory + Purchases - Closing Inventory

All these things I just mentioned above - every single one of them excludes VAT.

So short answer - gross profit always excludes VAT.

You need to calculate gross profit without VAT.

On your 2nd question, I'm not 100% sure about gross margin percentage but I think it's as follows:

Calculate the sales price first:
= Cost Price + 60% mark-up
= R2,104 + (R2,104 x 60%)

Gross margin percentage:
= (Difference between the Sales figure and the Cost) / Sales Figure
= (3,366.40 - R2,104) / R3,366.40
= 0.375
= 37.5%

That last one about calculating gross margin percentage is a tough one!

Hope that helps!

- Michael Celender
Accounting Basics for Students

Great help God bless you
by: NUKhan

Regarding VAT it is a real refresher.
Thanks for sharing.


Calculating VAT
by: Anonymous


Because the 10% IS the VAT.

The 10% IS the rate of Value Added Tax.

The actual value of goods (inventory, purchases, any assets) always excludes VAT.

You add VAT because the business has to charge VAT on its sales. The full amount collected in cash is the value of the goods PLUS the VAT added to this.

Hope that makes sense!

- Michael

Rep. of South Africa VAT
by: Anonymous


If R1,960 is the full amount on the invoice, then this is the figure INcluding VAT.

So you do this:
R1,960 x 14/114
= R241

Make sense?

- Michael

by: Anonymous


VAT Calculation in very Simple Way
by: Chris

To put it is a very simple way.

Item price: 4,954
VAT: 14%

To get the total amount all you have to do is:

Convert the percentage rate to a decimal number




693.56 is 14% of 4954



5647.56 is the total cost of the item including the VAT



That means: 23% is 0.23
2% is 0.02
10% is 0.1
1% is 0.01
38% is 0.38

As simple as that!

Great comment Chris! Thank you!

Inclusive and Exclusive
by: Boitumelo

Hey guys I have some few questions on till slip
The total item R498.93.
1) Calculate the amount payable including 14% vat
2) What is the total amount exclusive jurisdiction of Vat

VAT Including or Excluding
by: Anonymous


Use the 114 figure when you're starting from the inclusive figure (cash received, debtors amount, creditors amount, etc.).

- Michael

by: Anonymous



Michael Celender

VAT only
by: Anonymous





Exclusive amount is 100/10 X R1356.52.

The full inclusive amount is 110/10 X R1356.52.

- Michael Celender

VAT Rate
by: Anonymous


Then the VAT is R75 x 0.14 = R10.50

- Michael Celender

VAT Question
by: Anonymous




Hope that helps!

Michael Celender

by: Anonymous


Net purchase price 45,000 + 3,000 = 48,000
add VAT at 14 % (then it says) 6,720

Total purchase price = 54,720

I believe the 6,720 was derived from 48,000 X 14%.

Michael Celender

Calculate VAT
by: kuhle

the total is 318.59

Excluding VAT
by: Anonymous




- Michael Celender

by: PG

Which is the correct way to do vat is it

times 14
divide 100
times 14
divide 114

by: Anonymous


How to Add On VAT
by: Rozzi

add 14% vat to your net amount
7500. x 1.14 = 8 550.00 gross amount/incl

gross amount less net amount = vat 14%

you have the vat amount and need to find net amount

100/14 x 1 050. = 7 amount/excl

you have gross amount

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


Say the VAT amount paid was R5,000.00

So R5,000.00 x 114 ÷ 14 = R40,714.28

Which means the amount you paid for it was R40,714.28

Calculating VAT Backwards
by: Michael Celender



14/114 X Total Paid
=14/114 X R72,514.34

How Do I Calculate VAT Backwards
by: Bev


If only VAT amount is known
by: Anonymous


VAT on 7500
by: Michael Celender

R7,500 X 14/114 = R921

R7,500 X 14/100 = R1,050


VAT manually
by: Anonymous


vat calculating
by: Anonymous


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