Enter a price and a tax rate to go in either direction: add tax to a net figure, or remove it from a gross figure to see the net price and the tax portion separately. Useful for invoicing, expense claims and checking that a quoted price includes what you think it does.
Divide by 1 plus the rate. At 20% VAT, a gross price of 120 is 120 / 1.20 = 100 net, so the VAT is 20. Subtracting 20% from the gross figure gives the wrong answer.
VAT is collected at every stage of production with businesses reclaiming what they paid on inputs, and it is normally shown in the displayed price. US sales tax is charged once at the final sale and is usually added at the till.