The Unified VAT Agreement states that “the announced price in the local market for goods and services must include VAT.” This means that prices advertised to the public must include the value-added tax (VAT), such as in retail stores.
Most professional services are provided as business-to-business transactions, where the authority agrees that the supplier and the customer agree on a price excluding VAT or in exchange for the amount due for the supply of goods and services. In these cases, the agreement between them must clarify that the price does not include VAT. If the price is listed without mentioning VAT, it will be assumed that the amount includes VAT.
In such cases, or if the agreement includes another formulation that specifies the inclusion of VAT (such as “inclusive of all taxes”), the VAT due from the supplier is calculated as 15/115 of the total consideration payable.
The Unified Agreement defines the term “consideration” as follows:
“Everything received or to be received by the taxable supplier from the customer or a third party in return for the supply of goods or services, including VAT.”