1. What is the Margin And VAT Calculator?

This calculator helps businesses in the Philippines determine the final selling price of products by accounting for both the desired profit margin and the mandatory 12% Value Added Tax (VAT).

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Cost \) — Product cost in Philippine Pesos (PHP)
• \( Margin \% \) — Desired profit margin percentage
• \( VAT \) — Fixed 12% for Philippines

Explanation: The formula first calculates the pre-VAT price by accounting for the desired margin, then adds the 12% VAT to get the final selling price.

3. Importance of Margin and VAT Calculation

Details: Accurate pricing is crucial for profitability and compliance with Philippine tax laws. This calculator ensures you account for both your desired profit and the mandatory VAT.

4. Using the Calculator

Tips: Enter the product cost in PHP, your desired margin percentage (0-99%), and the calculator will automatically apply the 12% VAT. All values must be valid (cost > 0, margin between 0-99).

5. Frequently Asked Questions (FAQ)

Q1: Why is VAT calculated after margin?
A: In the Philippines, VAT is applied to the selling price, which includes your profit margin. This is the standard practice for VAT-inclusive pricing.

Q2: What if my business is VAT-exempt?
A: If your business is VAT-exempt, simply set the VAT to 0% in the calculation (though this calculator uses fixed 12% VAT for standard cases).

Q3: How does this differ from markup calculation?
A: Margin is calculated as a percentage of the selling price, while markup is a percentage of cost. Margin is generally more useful for pricing decisions.

Q4: What's the maximum margin I can enter?
A: The calculator accepts margins from 0% to 99%. A 100% margin would require division by zero and is mathematically impossible.

Q5: Are there rounding rules for VAT in the Philippines?
A: Yes, BIR requires VAT to be rounded to the nearest centavo (PHP 0.01). This calculator automatically does this rounding.