Tax

Invoice Components

Government-imposed charges added to the cost of goods or services.

Detailed Explanation

Taxes on invoices typically include sales tax, VAT (Value Added Tax), or GST (Goods and Services Tax), depending on jurisdiction. Tax amounts are calculated as a percentage of the subtotal and vary by location, product type, and whether the transaction is B2B or B2C. Businesses must collect applicable taxes from customers and remit them to government authorities. Tax rates and rules vary significantly by region, so accurate tax calculation is crucial for compliance.

Examples

  • 10% sales tax on $1,000 subtotal = $100 tax
  • VAT-registered businesses can reclaim input tax on purchases

Related Terms

Subtotal Total Amount Due VAT (Value Added Tax)

Ready to Create Your Professional Invoice?

Put your invoice knowledge into practice with our free invoice generator

Create Invoice Now
Back to GlossaryBack to Home