Formulas and practical examples for calculating VAT in Philippines
Calculating VAT is a simple and quick operation that can be done in a few seconds. But not everyone knows how to add and subtract percentages for this. The mistakes made when calculating VAT are always the same, although these are easy to avoid with the proper formulas.
It is essential to clarify certain points, to avoid preventable errors when calculating the total amount of a bill. These are the data you need to know to calculate VAT accurately and simply.
How to calculate VAT in Philippines step by step (12%, 18%)
In some stores or web portals, you may find prices with the comment "VAT not included". This means that it is not the final price, and that to that price you will have to add the cost of VAT to obtain the total to pay.
Formula to calculate VAT on a price without VAT
To calculate VAT in this case, the following formula must be used:
Practical example of calculating VAT at 12%
That is, if you have a product whose value is ₱900 without VAT and with a 12% of VAT, the formula would be as follows:
The price of the item must be multiplied by the VAT percentage, and that number divided by 100. In this case it would give ₱108. Then the amount of VAT would be ₱108.
Another alternative would be to divide 12% by 100, giving 0.12 as a result, and this being multiplied by ₱900, resulting in ₱108 in the same way.
To finish, you must add the base price of the product, for example, ₱900, plus the calculated VAT of ₱108, giving a final result of ₱1,008.
How to remove VAT from a price with VAT included?
How to know the price without VAT of a product
The opposite situation may also arise, where you want to remove the VAT. This occurs when the price tag shows one, but with the comment that the VAT is included. Knowing the net price of the product could be a totally valid question to have.
Formula to remove VAT from a final price
This can be answered by applying the formula of:
Example to remove VAT from 12%
In this case the ₱1,008 of the total product price would be divided by 1.12. Giving the following result:
In summary, if you have a VAT of 12% these are the operations to perform:
- ₱900 × 0.12 = ₱108 (To calculate VAT on prices that do not have it)
- ₱900 × 1.12 = ₱1,008 (To calculate the total price with VAT included)
- ₱1,008 ÷ 1.12 = ₱900 (To calculate the price without VAT)
VAT Calculator in Philippines: fast and accurate
While learning how to calculate VAT is very helpful, when dealing with more complex figures and needing maximum confidence in the results, a VAT calculator will be the most accurate option to use.
Use our VAT calculator to get instant results and greatly simplify your calculations. You don't need to complicate yourself with mathematical operations when you can do them automatically with this calculator.
Common mistakes when calculating VAT
Confusing price with VAT included
Applying the percentage incorrectly
Not distinguishing types of VAT
Frequently Asked Questions about the VAT Calculator in Philippines
What is VAT and who pays it?
VAT is an indirect tax that levies the consumption of goods and services and is paid by the final consumer when making a purchase. VAT (Value Added Tax), also known as VAT or GST in other countries, is applied at each stage of the commercial chain. Companies collect it and declare it to the tax authority, but the final cost always falls on the consumer. The percentage and application rules depend on the legislation of each country.
How to use the VAT calculator step by step?
To use a VAT calculator you only need to enter the amount, select the percentage and choose whether the price includes VAT or not. Once these data are entered, the calculator automatically shows the tax amount, the final price with VAT and the price without VAT. This process is valid for any country as long as the correct percentage is used.
Is the calculator reliable for large amounts?
Yes, a VAT calculator is reliable for any amount, as it uses standard mathematical formulas. The accuracy does not depend on the amount entered, but on the percentage applied. For official tax operations or professional invoicing, it is recommended to verify the results with a specialized advisor.
Where to check the official VAT rates?
Official rates and their updates should be consulted in the official sources of the government or tax entity of Philippines; the calculator recommends verifying the rates on the official website when there are doubts.
Can I calculate the VAT of other countries?
Yes, you can calculate the VAT of any country by manually entering the corresponding percentage. This is useful for international purchases, e-commerce or price comparisons. It is important to note that each country may apply specific rules or taxes equivalent to VAT.