BUSINESS

MATHEMATICS
~GROUP 2
TAX/TAXES
 WHAT IS TAX?
It is a compulsory monetary contribution to the state’s
revenue, assessed and imposed by a government on the
activities, enjoyment, expenditure, income, occupation,
privilege, property, etc., of individuals or organizations.
 DIFFERENCE BETWEEN TAX AND
DISCOUNT:
DISCOUNT
*deducts from the price (-)

TAX
*Adds to the price (+)
 Use TAX in a sentence:

Although most people do not enjoy paying

the government extra money when
purchasing an item, that tax helps the city
pay for things like roads, buildings and etc.
 TAXES CONSIST OF:

 Direct Tax

 Indirect Taxes 
Direct taxes covers the taxes that cannot be transferred or shifted to another
person, for instance, the income tax an individual pays directly to the
government.
• There are various types of Direct Taxes like:
• Examples of Direct Taxes:
• Income Tax
• Property Tax
• Wealth Tax (Abolished)
• Inheritance Tax (Abolished)
• Gift Tax (Abolished)
 Indirect taxes, on the other hand, are taxes which can be shifted to
another person. An example would be the Value Added Tax (VAT) that
is included in the bill of goods and services that you acquire from
others.

• There are various types of Direct Taxes like:

• Sales tax
• Excise duty
• Custom duty
• Entertainment tax
• Service tax
• Value added tax
 HOW TO SOLVE FOR TAX?
• Multiply the cost of an item or service by the tax in order to find out the total
sales .
Make sure you put the tax into decimal form. You do this by taking the percentage
and sliding the decimal point two places to the left: ...
Example: with 25% tax .25
P60 (item cost)
x .25 ( tax)
P15 total sales tax.
 How do you find tax rate in math?

• Divide the total cost by the given tax amount.

Example:P34.00 (tax amount) *Original Price=P416
P34
416
= 0.08 or 8%
 How do you figure out the bill of an item when the given are only the
tax amount and its corresponding tax rate?

To calculate for the bill of an item, just simply divide the tax amount by its
corresponding tax rate:
Formula: tax amount
tax rate
Ex: A dress has a tax amount of P22.5 with a corresponding tax rate 6%or
of 0.06.
Solution: P22.5/0.06
=P375.00 (total bill of the item)
 How do you add the tax to the price?
• Turn the percentage into a decimal. Move the decimal place two spaces to the left of
the number.
• For example 12.5 percent would equal .125 and 6 percent would equal .06. Multiply
the purchase price and the sales tax decimal to calculate the tax amount.
Example: Tax= 8%
P425.00 (Price of the shirt with tax)
x .08
P34.00 (total tax amount)
P425 - P34 = P391 (Price w/out tax)
P391+34= P425 √
 How to calculate for VAT?

VAT=
TAX CHARGED-TAX PAID
Kyle buys an article for P10,000 and pays 7% tax. He sells
the same article for P13,000 and charges 9% tax. Find the tax
paid by Kyle.
Solution:
Cost of the article=P10,000
Tax paid= 7% of P10,000
=7/100 x 10,000
=P700
Selling Price= P13,000
Tax charged at 9%= 9% of P13,000
=9/100 x 13,000
=P1,170
THEREFORE, VAT= tax charged- tax paid on purchase.
=P1, 170-P700
=P470
 Example Problem:
• You're buying a basketball in the toy store in the
Philippines, where the tax is 2.9%.[1] The basketball costs
P85.00. How much is the total cost of the basketball,
including the tax? Sol:
2.9 0.029
Total tax
P85.00 (0.029)= P2.465 or P2.50 amount
+2.50
Total cost
P87.50
Kenneth bought a computer, listed at P12, 200 and the total
bill came out to P12, 566 meaning that the sales tax was P366.
What is the sales tax rate?
Solution:
• Take the tax amount and divide it by the original price:
P366÷ P12,200 = 0.03
Convert the decimal into a percentage by moving the decimal
point two places to the right: 0.03 becomes 3%
• Your original sales tax rate is 3 %
A lawn mower shows the selling price to be
P9,500.00. If the tax rate is 12% how much will
you have to pay for the mower?
Solution:
selling price (tax rate)
P9500 (0.12)=P1,140.00 (tax amount)
Then, add the SP to the tax amount
P9500+P1140= P10,640.00 (total payment)
If a cabinet is bought at P8,000.00 and its
corresponding tax amount is 960. What is the tax rate?
Solution:
tax amount
total cost
P960
0.12 or 12%
P8000
A lady’s handbag has been added a tax amount of P83.994. Its
corresponding tax rate is 12%, what is the total bill for the
hand bag?

Solution:
tax amount
tax rate
P 83.994
P699.95
0.12
Ana buys a cabinet at P15,500 and pays 8% tax. She then sells
it to her friend for P17,000 and charges 10% tax.
Question: How to calculate VAT paid by Ana?
Solution:
Cost of the item=P15,500
Tax paid= 8% of P15,500
=8/100 x 15,500
=P1240
Selling Price= P13,000
Tax charged at 10%= 10% of P15,500
=10/100 x 15,500
=P1,550
THEREFORE, VAT= tax charged- tax paid on purchase.
=P1,550 – P1240
=P310
You're buying a watch with a tax of is 8%. The watch
costs P480. How much is the total cost of the watch,
including the tax?
8%= 0.08
P480(0.08)= P38.4 Tax amount

P480+P38.4= P518.4
total cost