What is sales tax?

Countries use different names. In the Caribbean the common forms are GCT in Jamaica and VAT in Trinidad and Tobago, Guyana and Barbados. Both work as a tax on consumption: it is charged at each sale, and registered businesses can claim back the tax they paid on stock and supplies. Rates and who must register differ by country, so always confirm with your tax authority.

Take a generic 10 percent tax for the example. A tax-exclusive price of $50 gets $5 of tax added: the customer pays $55. Going the other way, if the shelf price already includes tax and reads $55, the tax is not 10 percent of 55. Divide by 1.10: 55 / 1.10 = $50 price and $5 tax.

For a month with $20,000 of tax-inclusive sales at 10 percent, the tax portion is 20,000 x 0.10 / 1.10 = $1,818, and the shop's real sales are $18,182. Reporting $20,000 as sales overstates income by the tax.

• Treating collected tax as profit. It belongs to the authority until you hand it over.
• Taxing the wrong items. Some goods are zero-rated or exempt. Mark each product correctly.
• Calculating inclusive prices the wrong way. Multiplying by the rate instead of dividing gives the wrong tax figure.
• Charging tax below the registration threshold, where you are not registered to charge it.

In Shopkeepa, currency and sales tax (GCT or VAT) are shop settings, and each product has a taxable flag. Always check the rate and rules with the tax authority or an accountant. Shopkeepa is not yet available.