Sales Tax Calculation

Sales tax is the money collected by the government for the items purchased by citizens. This money is used for education, medical care, and public needs. Every citizen has to pay a certain amount of tax for the item or service he/she buys.

This post is just a guideline for those who want to understand how the tax system works in the world, not just in the U.S. and it does not give you any specific detail on the tax rates or exceptional information about the tax system.

How Is The Tax Calculated?

For example, you are a citizen with a citizen ID card and social security number, you want to buy a computer with a price of $900 and the tax rate is 10% in your country. You simply use this formula in order to find the sales tax of your purchase:

$900 x 10/100 = 90

The amount we get, 90 is the amount that you pay as the sales tax. The tax-free price of the computer you’re buying is $810 and the $90 amount is paid to the government for medical care, education and all the other services of the government.

This formula does not mean that you’re qualified for the same tax rate for every item or service you buy. Certain items and services may be taxed with different tax rates. For example, gas purchases and food purchases can be taxed with different amounts in different countries.

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