Value Added Tax

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

Simplified VAT process

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. 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.

"If you’re a small to medium size business who does or does not need multi-entity functionality and you’re looking for an accounting solution with hardly any restrictions, you HAVE to consider Gravity Software."

Michelle Keckler, Accounting Coordinator

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