Getting your South Africa VAT sums right?

VAT an acronym for value added tax is a levy placed on the consumption of goods and services within an economic system through the pricing system. VAT was made enforceable in South Africa on September 29th, 1991 at a rate of 10%.

This charge is enforceable on every consumed goods and services within South Africa. Although, the rate could be reviewed subject to the financial health of the economy as an instrument of trade.

The empowered by law to collect tax on behalf of the South African Government is ‘ South African Revenue Service’.

How to sum up VAT?

There are two approaches to it;
1.Adding VAT to a good or service initial cost
2.Deducting VAT from a good or service final cost

1.Adding VAT to a good or service initial cost
Write out the percentage VAT rate
Divide the percentage VAT rate by 100
The value gotten plus one. The one signifies the multiplier
The result gotten is called the ‘divisor’
The vat charge, that is Vat inclusive price will be the price of goods bought, that is VAT exclusive price multiplied by your divisor

2. Deducting VAT from a good or service final cost
 Write out the percentage VAT rate
 Divide the percentage VAT rate by 100
 The value gotten plus one. The one signifies the multiplier
 The result gotten is called the ‘divisor
The Vat to be removed, that is the VAT exclusive price will be, the price of goods charged with the tax rate divided by the divisor