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Returns, discounts and sales tax

3.3 Calculation of sales tax

Sales tax is charged at a variety of rates around the world. It is also subject to
different rates for different products within national boundaries. To reflect this ACCA
will examine you on a variety of rates – the rate will always be given to you in the
question.

Proforma

20% 17.5% 15% 10%

Net selling price (tax exclusive) 100% 100% 100% 100%

Sales tax 20% 17.5% 15% 10%

Gross selling price (tax inclusive) 120% 117.5% 115% 110%

 The net selling price is the price set by the entity that will be its sales revenue

 The gross selling price is the price charged to customers.

 The difference is the sales tax collected on behalf of the tax authority.

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