VAT Calculator

How this VAT calculator works

VAT (value-added tax) is a percentage added to the net price of goods and services. This calculator links the four quantities — VAT rate, net price, gross price and tax amount — so any two you know define the other two.

Worked example

At a 20% rate on a $100 net price, the VAT is $100 × 0.20 = $20 and the gross price is $120. Working backwards, a $120 gross at 20% divides by 1.20 to give the $100 net and $20 VAT.

Because GST (goods and services tax) works exactly like VAT, you can use this tool for GST too — just enter your local rate.

Understanding VAT

What is VAT?

Value-added tax is an indirect consumption tax charged on the value a business adds to a product or service at each step of the supply chain — from raw materials through to the final sale. Each seller collects it and passes it on, but the end customer ultimately bears the cost. More than 160 countries levy some form of VAT, making it one of the largest sources of public revenue worldwide. Every country in the European Union must apply a standard rate of at least 15%, while the United States is the only major developed economy without a nationwide VAT — it relies on state and local sales tax instead.

VAT vs. sales tax

Both are consumer taxes added as a percentage of price, but they are collected differently. Sales tax is charged just once, at the final sale to the shopper. VAT is charged at every stage of production and distribution, yet businesses reclaim the VAT they paid on their own purchases, so only the value added at each step is actually taxed. That stage-by-stage paper trail makes VAT harder to evade — one reason so many countries favour it — while the total a customer pays at the same rate ends up broadly similar either way. If you need US sales tax specifically, use our sales tax calculator.

VAT, GST — different names, same idea

In several countries VAT goes by the name GST (goods and services tax), including Australia, Canada, India, New Zealand and Singapore. The mechanics are essentially identical: a percentage added along the supply chain and carried by the final consumer. Rates and coverage vary widely — many countries apply reduced or zero rates to essentials such as food, medicine and books, and a higher standard rate to everything else.

How VAT flows through the supply chain

Say the VAT rate is 20%. A timber supplier sells wood to a furniture maker for $100 plus $20 VAT, and remits that $20. The maker builds a chair and sells it to a shop for $250 plus $50 VAT — but reclaims the $20 already paid, so hands over $30. The shop sells the chair for $400 plus $80 VAT and, reclaiming the $50, remits another $30. The government collects $20 + $30 + $30 = $80 in total — exactly 20% of the final $400 price. Each business is taxed only on the value it added, and the shopper carries the full $80.

How to use it & key terms

Enter a net or gross price and your VAT rate, then press Calculate to add or remove VAT and see both figures side by side.

VAT vs sales tax — the real difference

They raise money from consumption in opposite ways. US-style sales tax is charged once, at the final retail sale, and only the end customer pays it. VAT (called GST in some countries) is charged at every stage of the supply chain, but each business reclaims the tax it paid on its own inputs — so only the value added at each step is actually taxed. The customer still bears the full amount at the end; the collection is simply spread across the chain.

That design makes VAT largely self-policing, because each business has a paper trail and an incentive to document what it paid — one reason most of the world uses VAT or GST rather than a single-stage sales tax. It also shows up at the till: VAT is often quoted inclusive in the shelf price, while US sales tax is usually added on top at checkout. Knowing whether a quoted price already includes the tax is the key to reading any total correctly.

Zero-rated, exempt, and reclaiming VAT as a visitor

Not everything under a VAT system is taxed at the headline rate, and the categories are subtler than they first look. Goods and services are typically sorted into standard-rated, reduced-rated, zero-rated and exempt — and the last two are not the same thing, even though both mean no VAT reaches the customer. A zero-rated item is technically taxable at a rate of nothing, which still lets the seller reclaim the VAT on its own costs; an exempt item sits outside the system, so the seller cannot reclaim that input VAT. The difference is invisible on a receipt but significant to the business.

VAT also does not fall on every seller. Most systems set a registration threshold: a business whose turnover stays below it need not register or add VAT at all, which is why the smallest traders often quote prices with no tax component. Once a business grows past that threshold it must register, charge output VAT on its sales and reclaim the input VAT on its purchases, handing over only the difference. Registered businesses also issue VAT invoices, the paper trail that keeps the tax landing on the value each business adds rather than on the full price at every stage.

Because VAT is a tax on domestic consumption, visitors can sometimes step outside it. Many countries run a tax-free shopping scheme that lets travellers reclaim the VAT on goods they buy and carry home, on the logic that the item will be used abroad rather than locally. The refund usually requires proof of export at the border and applies to goods rather than services, but it can noticeably lower the cost of a large purchase made while travelling — the mirror image of the way imported goods are taxed when they arrive in a country.

For a single price the arithmetic above is all you need, but these rules explain why two similar items can carry different VAT, and why a business and a tourist experience the same tax so differently. Thresholds, rates and refund schemes differ from country to country, so treat the result here as an estimate and confirm the rate and category that apply to your purchase against current official guidance.