How do you strip VAT or GST from a tax-inclusive price?

To remove tax from a gross price, divide by [1 + (Rate / 100)]. For example, to strip 20% VAT from $120, divide by 1.20, which gives a net price of $100 and tax of $20. Subtracting 20% directly is an arithmetic mistake.

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[06] • STATUTORY INSTRUMENT

Bidirectional Sales Tax & VAT Calculator

Add statutory sales tax to a net base price or extract inclusive VAT and GST from gross retail invoices with exact cent rounding.

Base Amount

Tax Rate (%)

Computation Mode

Common Global Tax Rates

5% (GCC / Canada GST) 10% (Australia / Japan) 15% (New Zealand) 18% (Pakistan / India GST standard) 20% (UK / France standard VAT) 25% (Sweden / Denmark VAT)

DIRECT ANSWER • STATUTORY TAX ALGORITHMS

Adding Tax vs Stripping Tax Formulas

Tax Inclusive (Adding Tax): $\text{Tax} = \text{Net} \times (R / 100)$, $\text{Gross} = \text{Net} + \text{Tax}$
Tax Exclusive (Extracting Inclusive Tax): $\text{Net} = \text{Gross} / (1 + R / 100)$, $\text{Tax} = \text{Gross} - \text{Net}$

The Critical Arithmetic Difference Between Adding and Removing Tax

Adding tax involves direct multiplication. Removing tax is where bookkeepers and small business owners frequently commit accounting errors. You cannot subtract the tax percentage from a gross figure: if you take 20% off $120, you subtract $24, arriving at $96—which is incorrect. The true net base is $100 ($120 / 1.20) and the tax collected was $20.

Bidirectional Sales Tax & VAT Calculator

Adding Tax vs Stripping Tax Formulas

The Critical Arithmetic Difference Between Adding and Removing Tax

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