Addition of VAT
VAT, or Value Added Tax, is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. It's a form of indirect tax.
Addition of VAT:
To calculate the value including VAT in Philippines:
1. Multiply the value by 1 + VAT Percentage.
2. For example, if the VAT rate is 18% (like in the Philippines), you would do value X 1.2.
3. For instance, 150 PHP value X 1.2 = 177 PHP, This is the amount including the VAT.
Removal of VAT
VAT can be removed or reclaimed by businesses in certain circumstances, such as exportation or when the product or service is exempted from VAT.
Example of Removal of VAT:
To calculate the amount excluding VAT in Philippines:
1. Divide the amount by 1 + VAT Percentage.
2. For example, if the VAT rate is 18% (like in the Philippines), you would do amount / 1.2.
3. For instance, 180 PHP amount / 1.2 = 152.54 PHP, this is the amount excluding VAT.