What VAT and sales tax are
VAT (Value Added Tax) is a consumption tax added on top of the price of most goods and services. It goes by different names around the world: in the Dominican Republic it is called ITBIS and the standard rate is 18%; in the UK and much of Europe it is VAT; in the United States a similar role is played by state and local sales tax. Whatever the label, the idea is the same — the shopper pays the tax, and the business collects it and passes it on to the tax authority.
Day to day you run into two problems: sometimes you know the clean price and need to add tax to invoice a customer; other times you see a tax-inclusive price and want to know how much is the item and how much is the government’s share. This calculator handles both in one click, and it runs entirely in your browser.
How to add and how to remove tax
- Type the amount in the first field.
- Pick the rate: tap a quick button (18% RD, 16% Mexico, 21% Spain, 12%, 10%) or type any percentage.
- Choose the mode:
- Add tax: the amount is the net price and you want the gross total to charge.
- Remove tax: the amount already includes tax and you want to split out the base.
- Read the three results: base, tax and total. Hit Copy to grab any figure.
The formulas
To add tax, multiply the base by the rate and add it back:
tax = base × rate / 100total = base + tax
To remove tax, watch out for the classic trap: removing 18% is not the same as subtracting 18% from the total. A tax-inclusive price represents 118% of the base, so you have to divide, not subtract:
base = total / (1 + rate / 100)tax = total − base
Worked example
A service costs 1000 before tax and you apply an 18% rate:
- Tax:
1000 × 18 / 100 = 180 - Gross total to invoice:
1000 + 180 = 1180
Now in reverse. You are shown a tax-inclusive total of 1180 and want to break it down:
- Base:
1180 / 1.18 = 1000 - Tax:
1180 − 1000 = 180
Here is the catch: if you had wrongly subtracted 18% of 1180 you would get 967.60 — the wrong base. Dividing is the correct move.
Tax rates by country
| Country | Tax | Standard rate |
|---|---|---|
| Dominican Republic | ITBIS | 18% |
| Mexico | IVA | 16% |
| Spain | IVA | 21% |
| Colombia | IVA | 19% |
| Chile | IVA | 19% |
| Argentina | IVA | 21% |
Many countries also apply reduced rates to specific goods; the table shows only the standard rate.
Frequently asked questions
Why isn’t removing tax the same as subtracting 18%?
Because 18% of the total is not the same as 18% of the base. When a price already includes tax, the total equals the base plus its own 18% — that is 118% of the original value. To recover the base you divide the total by 1.18. Subtracting 18% of the total always lands below the correct figure.
Which products are exempt from ITBIS in the Dominican Republic?
The law exempts several basic-basket and social-interest goods and services: many unprocessed foods, medicines, health services, education services and financial services, among others. The exact list is set by current regulation and changes over time, so confirm with the DGII or an accountant before invoicing.
How do I find the price before tax?
Take the final, tax-inclusive price, switch to Remove tax mode and enter the rate. The tool divides the total by 1 + rate / 100 and returns the clean base. At 18% you divide by 1.18; at 16% by 1.16.
Does it work for multi-line invoices?
Yes — run each line or the overall subtotal. Some invoices round the tax on each line separately, so the grand total can differ by a few cents from a single calculation on the full subtotal.