How to calculate 14% VAT in a shop in Egypt, with worked examples

What are the two ways to calculate 14% VAT?

A shop sets its prices one of two ways, and the arithmetic follows from that choice.

VAT added: the shelf price is the net price, and VAT goes on top at the till. The customer pays the price × 1.14, and the VAT is the price × 0.14.

VAT included: the shelf price is what the customer pays, and the VAT is already inside it. The net is the price ÷ 1.14, and the VAT is the price × 14 ÷ 114, which is about 12.28% of the price.

How much is 14% VAT on common prices?

What is the most common VAT mistake?

Taking 14% of a price that already includes VAT. On a shirt sold at EGP 1,140 including VAT, 14% of the price is EGP 159.60, but the VAT inside the price is only EGP 140. The difference, EGP 19.60 on one shirt, makes the shop's VAT figure wrong on every sale.

The second mistake is mixing the two ways in one shop, with some labels including VAT and some not. Choose one way for every price, and print it the same way on every shelf label.

How does PointLit apply VAT?

PointLit works from one active tax rule for the whole business, at every branch. The rule holds the rate and whether your prices include the tax. On each sale, PointLit works out the tax line by line, after any discounts, rounds each line to the piastre and adds the lines up, so the tax on the bill always equals the sum of its lines. Loyalty points are a way of paying, not a discount, so they never lower the tax. The Egypt page sums up how PointLit fits a shop in Egypt.

1. Open Manage, then Tax. The screen is called Tax rules.
2. Press Add a rate. Type a Name such as VAT, and 14 in Rate (%). Leave Jurisdiction as default.
3. Tick Included in the price if your shelf prices already include VAT. Leave it clear if VAT is added at the till.
4. Keep Active ticked and press Save the rules. The rule applies to sales from then on; bills already rung keep the tax they were charged, so a refund gives back exactly what was collected.
5. Under Business, type your Tax number. Each receipt prints it, or each branch's own number when Use the location's tax number is on.

Where do you see the VAT you collected?

Every shift's Z report breaks the takings down by tax rate, and the other places are listed below. PointLit does not send these figures to the Tax Authority: our guide to e-receipts in Egypt explains what the Authority's system asks for.

• On each receipt: the tax and your tax number.
• On each shift's Z report: the takings By tax rate, with the net and the tax. The Z report is on every plan, including the Free plan.
• In the Tax summary report: Sales before tax, Tax on sales, Returns before tax, Tax on returns and Net tax for any period, on Counter, Chain and Enterprise.
• On shelf labels: if your prices exclude VAT, Add tax to prices in the Barcode Printer prints each price with VAT, as the till charges it.

What if some of your products carry another rate, or none?

Egypt's VAT law has exempt goods and services, a lower rate on some machinery and equipment, and a zero rate on exports. PointLit cannot give a single product its own rate or mark it exempt yet: one rate applies to the whole sale. If a large part of what you sell is exempt or taxed differently, talk to your accountant before you decide how to set up your tax.