VAT including: how to calculate using the formula?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

VAT is a budget-forming payment of the Russian tax system. Therefore, many business entities have to count and pay it. The exception is companies and entrepreneurs who use alternative tax systems - they are exempt from paying this tax, except for certain operations. Most often, VAT is charged by the seller to the cost of goods (services) and is allocated in documents. But there are cases when it is necessary to isolate it from the total amount of the operation. Next, we will figure out when it is needed and how it is done.

VAT in brief: mechanism and rates

VAT is an indirect tax imposed on the sale of most goods and services. It is usually included in the price and paid out of the buyer's pocket. At the same time, the seller is formally the tax payer - he must take the tax from the amount received from the buyer and pay it to the budget. This is how the mechanism of indirect taxation works.

The base tax rate is 18%. It applies to most taxable objects. Along with it, there is a reduced rate of 10% for preferential categories of goods. Many types of food fall under it,baby products and certain medical devices. Another preferential rate is 0%. It is used for export, for the implementation of a whole range of services related to international transportation, as well as for individual objects of sale. In addition, there are a number of transactions that are fully exempt from VAT.

What does VAT mean "including"

VAT is usually included in the price specified in the contract or on the price tag, that is, the price is prescribed including tax. Its amount is indicated separately along with the total amount of the transaction. This is due to the fact that without tax allocation as a separate line, it is impossible to apply the tax deduction mechanism. And although the requirement to allocate the amount of tax for deduction applies only to invoices, it, as a rule, is always indicated in other documents - in contracts, acts, invoices. In this case, the question of how to calculate VAT "including" does not arise, because the amount of tax is directly indicated.

For example, the service agreement says that the total cost of services is 354,000 rubles, while the tax amount is 54,000 rubles. Everything is clear here: the contractor requested 300,000 rubles for his services, charged VAT on this amount at the base rate and indicated the full cost in the contract.

But it happens that only the total amount is registered in the documents and it is indicated that the tax is included in it. However, it is unclear exactly how much it amounts to, so it will have to be calculated if necessary.

Calculation method

The Tax Code provides the procedure for applying the VAT calculation method. It is mentioned in part 4 of article 164. The calculation is quite simple. The rate is equal to the ratio at which the numerator is the current tax rate, and the denominator is the same, increased by 100. Thus, the estimated VAT rate is:

• 18/118 - at 18% tax rate;
• 10/110 - at a rate of 10%.

Now let's look at how to calculate the number without VAT. Using the 18% rate as an example, the formula would look like this:

B=S – S(18 / 118), where B is the base cost of the item before tax and S is the total amount of the transaction including tax.

When you need to isolate the tax from the amount

Before looking at an example of how to calculate VAT "including", let's see when it is needed. The Tax Code states that the settlement method of calculation is used by the seller of goods and services in the following cases:

• upon receipt of prepayment, including partial;
• when VAT is paid by a tax agent;
• when reselling property subject to tax;
• when selling agricultural products and cars that were purchased from individuals;
• in some other cases.

The buyer sometimes also has to calculate VAT from the total amount. For example, if he is invoiced for tax, and he plans to pay it in installments.

Separate VAT from the advance payment

In practice, the question of how to calculate VAT "including" most often arises whenreceiving a partial prepayment from the buyer. For example, the total amount of the contract, including VAT, amounted to 472,000 rubles. The terms of the agreement allow the buyer to transfer an advance payment of at least 50% of this amount. The buyer transferred 236,000 rubles, and the seller should calculate the tax and reflect it in the account.

How to calculate VAT including? The formula based on the calculated rate will take the form:

Prepayment amount18 / 118.

We get the following value: 236,00018 / 118=36,000 (p) - this is exactly the amount of tax calculated at a rate of 18% in the amount of the received prepayment.

Calculate the amount without VAT: 236,000 - 36,000=200,000 (p).

So, in the above example, the buyer transferred 236,000 rubles to the seller as an advance payment, and the tax amounted to 36,000 rubles.

VAT at the tax agency

There are cases when a subject must fulfill the duty of a tax agent, that is, pay VAT not for himself, but for his counterparty. A typical example is the lease of premises from municipal authorities. Moreover, it does not matter what system of taxation the tenant is on. In other words, companies and individual entrepreneurs who do not pay this tax themselves may face the need to calculate VAT.

Let's consider an example. The company leases premises that are classified as municipal property. The rent is 118,000 rubles per month, including 18% VAT. The tenant must calculate, withhold and pay the tax to the budget, since in this transaction thetax agent by virtue of law. How will VAT be calculated? It depends on the terms of the contract. There are 3 options:

1. The contract specifies the total amount and the amount of tax. There is no need to calculate anything - the agent withholds this amount and transfers it to the budget.
2. The contract states that the cost of rent is 118,000 rubles per month, including VAT. How to calculate the tax in this case is described in detail above.
3. There is no mention of tax in the contract. In such a situation, the rent is considered to include tax. The calculation is made as in option No. 2. However, when concluding an agreement, it is important not to forget that VAT will be deducted from the amount appearing in it, and take this into account when determining the rent.

Summarize

Often an accountant or a businessman is faced with the need to calculate the amount of VAT "including". As follows from the article, there is nothing complicated about this. Most often, the above formulas have to be resorted to when receiving an advance payment, as well as when acting as a tax agent. Moreover, in the latter case, such a need arises not only for subjects on the DOS. Therefore, knowing the basics of working with VAT will also be useful for those who, due to the application of a special regime, usually do not pay this tax.