Business Math Terms
- Sales Tax is a tax levied on the retail price of products and services which is collected by the retailer and subsequently remitted to the appropriate government agency.
- Value-Added Tax, or VAT, is a tax levied on products which reflects the estimated value added to the product at each stage of production or distribution. The VAT is ulimately paid by the customer.
- The sales tax rate is expressed as a percentage
- Given the purchase price of a product or service and a sales tax rate:
Sales Tax = (Purchase Price) x (Sales Tax Rate)
- Once the tax is computed, it is added to the purchase price to determine the total amount the customer must pay for the product or service
- The value-added tax rate is expressed as a percentage
- Given the purchase price of a product and a value-added tax rate:
Value-Added Tax = (Purchase Price) x (Value-Added Tax Rate)