# How to compute for VAT

Financial expert Henry Ong discusses Value Added Tax computation.
By Henry Ong |

Q: How do I compute the VAT?

A: The Value Added Tax is computed by getting the difference of the output tax and input tax. If you are the seller, you pass on the VAT to your client by adding 12 percent to your selling price.

If you are the buyer of goods and services, you will need to pay VAT by computing for your output tax and input tax. Output tax is computed by dividing your total sales with the factor 9.3333. For example, your total sales is P112,000. Your output tax is computed by dividing P112,000 with 9.333, which means your output tax is P12,000.

The input tax applies to your expenses that have VAT receipts. Take your total expenses and divide it by 9.333. For example, your total expenses is P44,800. Your input tax is P44,800 divided by 9.333, which gives you P4,800.

Now that you have computed both output and input taxes, you can compute your VAT which is P7,200 (P12,000 - P4,800).