Unlike a Sales Tax, a Value Added Tax (VAT) is a consumption tax placed on a product when value is added at each step of the supply chain. If your business is in one the 160 plus countries around the world using value-added taxation, Gravity Software™ (Gravity) VAT calculations has you covered. Gravity tracks the tax on the value of the product, less any of the costs of materials used in the product that have already been taxed. Gravity’s Tax Reports makes it easy to file tax returns with local and federal authorities.
VAT Calculation – Assume VAT is 10%
|Company||Description||Cost of Goods||VAT||Total Cost of Goods||Who Pays the VAT to the Government||VAT Payment Amount|
|Farmer||Farmer sells wheat to a Baker||20 Cents||2 Cents||22 Cents||Farmer||2 cents|
|Baker||Baker makes bread with the Wheat and sells to the Supermarket||60 Cents||6 Cents||66 Cents||Baker||4 cents|
|Supermarket||Supermarket sells the bread to the Customer||90 Cents||9 Cents||99 Cents||Supermarket||5 Cents|
|Total Amount the Government Receives in VAT||11 Cents|
Save your business time with Gravity’s automated VAT calculations. Gravity will calculate the amount of tax required so you can easily file your returns.
Gravity Software’s cloud-based accounting solution is written on the Microsoft Dynamics 365 (aka Microsoft CRM) platform. Gravity fills the gap between entry level accounting software like QuickBooks and expensive enterprise applications like Sage Intacct. Learn more about Gravity and schedule your online demo today!
Better. Smarter. Accounting.