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Use these simple steps to work out Vat correctly every time

by , 15 April 2014
Don't be the person who's still struggling to work out their Value Added Tax (Vat). Many people find it complicated to understand how this tax is calculated. It doesn't have to be this way though - especially when there are simple tools to make it easier. Read on to find out how to calculate Vat correctly in just a few simple steps....

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Find the solution to getting your Vat refunds quicker right here.
 
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How do I work out Vat?
 
Trying to calculate Vat yourself with nothing but a calculator can be difficult. This is why there are so many Vat calculators available online. 
 
An online Vat calculator will immediately work out the correct Vat. This is because it already has all of the equations that it needs to work it out. 
 
But regardless of which tool you use, there are three basic steps you must use to work out your Vat. 
Practical VAT says that these are:
 
Step 1: Determine your output tax. This is the Vat you charged your clients.
 
Step 2: Calculate your input tax. This is the Vat you paid when the product was made or bought
 
Step 3: Pay the difference to SARS, or claim your refund.
 
So now that you know how to do it, do you know why you're paying Vat in the first place?
 
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How to make yourself invisible to SARS
 
Did you know that SARS plans to conduct more than 72,926 audits this year? It's added hundreds of new collectors to its payroll and each one has his own collection targets to meet. All of which means two things:
 
1. If you're not compliant, your chances of an audit this year has just doubled, and
2. You will pay more in penalties.
 
 
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Why and what am I paying for Vat?
 
Vat is a tax on the increased value of something. Metal and glass only have so much value. When you put them together with electric parts and make a TV however, you increase the value. Hence we pay tax on the added value. That's why it is Value Added tax. 
 
The standard rate for VAT is 14%. According to Value Added Tax (VAT) and VAT Calculations some things have a Vat charge of zero percent. These are things like bread, milk, fruit and basically most basic food supplies. Basic services such as childcare and education can't have a Vat charge either.
 
Vat is easy to understand when you remember the tools that are there to help you work it out.
 

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