A value-added tax (VAT) calculator is a tool used to determine the amount of VAT included in a price, or to calculate the total price including VAT. For example, if a product costs 100 units before tax, and the VAT rate is 21%, the calculator would determine the VAT amount (21 units) and the final price (121 units).
These tools are essential for businesses to comply with tax regulations and manage their finances effectively. Accurate VAT calculations are crucial for pricing, invoicing, and reporting. Historically, calculating VAT was a manual process, prone to errors. The advent of digital calculators, particularly online tools, has simplified this process, increasing efficiency and reducing errors. This automation is especially beneficial for businesses dealing with large numbers of transactions or complex VAT structures.