How to calculate VAT

Three terms matter here: the net amount, the price of the good or service before tax; the VAT, the amount added at the prevailing rate; and the gross amount, net plus VAT, which is what the buyer actually pays.

The relationship is simple: gross = net × (1 + rate ÷ 100). This single relationship solves all three cases, as long as you know which figure you are starting from — net or gross.

VAT rates differ from country to country and can vary within a country between categories of goods and services, with reduced rates and exemptions. That is why Klar’s calculator lets you enter a custom rate yourself.

Do not assume a rate. Check the current rate in your country and which goods and services are covered, using official tax authorities, and make sure it is up to date before using it in your calculations.

This is the most common case, often used when setting a selling price: you have a net price and want to know it after VAT. Multiply the net amount by (1 + rate ÷ 100) to get the gross amount, then subtract net to find the VAT.

Using the calculator’s example: a net price of 1,000 riyals at 16%. VAT = 1,000 × 16 ÷ 100 = 160 riyals, and the gross amount = 1,000 + 160 = 1,160 riyals.

Sometimes you have a gross price that includes VAT and need the net figure. Divide the gross amount by (1 + rate ÷ 100).

Example: a gross amount of 1,160 riyals at 16%. Net = 1,160 ÷ 1.16 = 1,000 riyals. Note that removing VAT is not simply subtracting 16% from the gross, because the rate applies to the net amount, not the gross.

You may need the VAT figure on its own, for example to prepare an invoice or a tax filing. First find the net amount by dividing gross by (1 + rate ÷ 100), then subtract it from the gross.

Example: a gross amount of 1,160 riyals at 16%: net is 1,000 riyals, so VAT = 1,160 − 1,000 = 160 riyals. This is the same figure as in the adding case, which confirms how the three calculations fit together.

The most common error is applying the rate to the wrong amount: when removing VAT from a gross amount, do not subtract the rate directly — divide by (1 + rate ÷ 100). Another frequent mistake is confusing net and gross when entering the amount.

Always select the correct case add, remove or extract before entering numbers, and sanity-check the result: the gross amount must always be larger than the net amount.

These calculations are estimates that help with everyday planning, but they do not replace knowing the official tax rules in your country. Those rules may include exemptions, multiple rates, registration thresholds and filing obligations for businesses.

If you are dealing with formal taxes or large amounts, verify with the relevant tax authority or consult a licensed accountant or tax adviser to make sure you comply with the applicable rules.