VAT is a budget-forming payment of the tax system of Russia. 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 this tax, except for certain operations. Most often, VAT is charged by the seller to the cost of the goods (services) and is highlighted in the documents. But there are cases when it is necessary to isolate it from the total amount of the operation. Next, we will understand when it is needed and how to do it.
Briefly about VAT: mechanism and rates
VAT is an indirect tax levied on the sale of most goods and services. Usually it is included in the price and paid from the buyer's pocket. In this case, 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 indirect taxation mechanism works.
The basic tax rate is 18%. It is valid for most taxable objects. Along with it, there is a reduced rate of 10% for preferential categories of goods. Many types of food, baby products, and certain medical products fall under it. Another preferential rate is 0%. It is used for export, in the implementation of a whole range of services related to international transport, as well as for individual objects of sale. In addition, there are a number of operations that are completely exempt from VAT.
What does “including” VAT mean
VAT is usually included in the price indicated in the contract or on the price tag, that is, the price is prescribed taking into account tax. Its amount is indicated separately along with the total amount of the operation. This is due to the fact that without taxation 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 is usually 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 contract says that the total cost of services is 354,000 rubles, with the tax amount being 54,000 rubles. Everything is clear here: the contractor requested 300,000 rubles for his services, charged VAT for this amount at the base rate and indicated the full price in the contract.
But it happens that the documents spell out only the total amount and indicate that the tax is included in it. However, it is not clear how much its amount is, therefore, if necessary, it will have to be calculated.
Calculation method
The Tax Code provides the procedure for applying the calculation method of calculating VAT. 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 a tax rate of 18%;
- 10/110 - at a rate of 10%.
Now consider how to calculate the number without VAT. For example, the rate of 18%, the formula will look like this:
B = S - S * (18/118),
where B is the base value of the goods before tax, and S is the total amount of the transaction, including tax.
When you need to isolate the tax from the amount
Before you look at an example of how to calculate VAT “including”, let's see when it is needed. The Tax Code says that the calculation 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 that is subject to tax accounting;
- when selling agricultural products and cars that were purchased from individuals;
- in a number of other cases.
The buyer sometimes also has to calculate VAT using the settlement method from the total amount. For example, if he is billed for tax, and he plans to pay it in installments.
Allocate VAT from the advance amount
In practice, the question of how to calculate VAT “including” most often arises when a partial prepayment is received from a 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 of at least 50% of this amount. The buyer transferred 236,000 rubles, and the seller should calculate the tax and record it.
How to calculate VAT including? The formula based on the estimated rate will take the form:
Prepayment amount * 18/118.
We get the following value: 236,000 * 18/118 = 36,000 (p) - this is how much tax is calculated at a rate of 18% in the amount of the prepayment received.
We calculate the amount without VAT: 236,000 - 36,000 = 200,000 (p).
So, in the above example, the buyer transferred 236,000 rubles as an advance payment to the seller, and the tax amount was 36,000 rubles.
VAT at the tax agency
There are times when an entity must fulfill the duty of a tax agent, that is, pay VAT not for itself, but for its counterparty. A typical example is the rental of premises from municipal authorities. And it doesn’t matter what tax system the tenant is on. In other words, companies and individual entrepreneurs who do not pay this tax themselves may be faced with the need to calculate VAT.
Consider an example. The company rents premises belonging to the category of municipal property. The rent is 118,000 rubles per month, including 18% VAT. The tenant must calculate, withhold and pay tax to the budget, since in this transaction acts as a tax agent by force of law. How will the VAT be calculated? It depends on the provisions of the contract. There are 3 options:
- The total amount is specified in the contract and the amount of tax is indicated. You do not need to calculate anything - the agent withholds this amount and transfers it to the budget.
- The agreement states that the rental price is 118,000 rubles per month, including VAT. How to calculate the tax in this case is described in detail above.
- The contract does not mention tax. In such a situation, rent is considered to include tax. The calculation is made, as in option No. 2. However, when concluding the contract, it is important not to forget that VAT will be deducted from the amount included in it, and take this into account when determining the rent.
To summarize
Often an accountant or businessman is faced with the need to calculate the amount of VAT “including”. As follows from the article, this is nothing complicated. Most often, the above formulas have to be resorted to when prepaying, as well as playing the role of a tax agent. Moreover, in the latter case, such a need arises not only in subjects on DOS. Therefore, knowing the basics of working with VAT will be useful to those who, due to the application of the special regime, usually do not pay this tax.