# VAT (value added tax)

**Definition:** VAT is a tax on spending that registered businesses add to the price of goods and services and pay over to the tax authority, after deducting the VAT they paid on their own purchases. Rates differ by country: 7.5% in Nigeria, 16% in Kenya, 15% in South Africa and 20% in the UK.

To add VAT, multiply the net price by (1 + rate). To take VAT out of a VAT-inclusive price, divide by (1 + rate); the difference is the VAT. Exempt and zero-rated items, registration thresholds and filing dates vary by country, so check your tax authority's guidance or an accountant.

Ghana charges 15% VAT plus the 2.5% NHIL and 2.5% GETFund levy on the same base (20% in total since 1 January 2026). The United States has no VAT; states and cities charge sales tax instead.

## Related

- [VAT calculators by country](https://profynix.com/tools/vat-calculator)
- [Profynix by country](https://profynix.com/countries)