How do I work out VAT content?

VAT, formally known as Value Added Tax, is a type of tax that is levied on all goods and services produces in a country. For example, the UK's VAT rate was increased from 15 to 17.5 per cent in 2010, and then to 20 per cent in 2011. VAT in most countries varies from 10 to 25 per cent. The VAT content of a product refers to how much taxes are levied on a sale of a product. Retail prices normally include VAT while wholesale prices do not. You may want to calculate VAT content of a product to know the amount of money that goes to the government coffers from the sale of a product. You may also be interested in the VAT if you are a wholesale buyer and would like to know how much tax you will need to pay.

Read the price of a product. Let's assume that the product costs £10.

Look up the VAT rate for this product. Usually VAT is uniform across all products, though there are notable exceptions. Food, cultural events, works of art, charitable events, and education are VAT-exempt in many countries. The VAT rates for different products can be checked at the tax collector's office. In the UK, it is Her Majesty's Revenue and Customs.

Multiply the value of the product by the VAT rate (measured in percentages), then divide by 100. For example, if the value of the product is £10, and the VAT rate is 20 per cent, then the VAT content will be: £10 * 20 / 100 = £2

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About the Author

Eliah Sekirin started writing newspaper articles in 2003. His work has appeared in "Junij Poliyehnik" and on Web sites such as Prepodi.com. His writing interests are business, finance, economics, politics, arts, history, culture and information technology. Eliah holds a Bachelor of Science in econometrics from Kiev Polytechnic Institute.

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