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If a furniture purchase costs 1 Million, how much is the VAT component?

305,658.52

132,845.10

To determine the VAT component of a furniture purchase that costs 1 million, we first need to know the applicable VAT rate. In many regions, the VAT rate ranges from 5% to 25%. However, one common VAT rate is 20%, which can be used for this calculation.

When calculating the VAT amount, you can use the following formula:

VAT = (Total Cost * VAT Rate) / (1 + VAT Rate)

Assuming a VAT rate of 20%, the formula becomes:

VAT = (1,000,000 * 0.20) / (1 + 0.20)

VAT = (1,000,000 * 0.20) / 1.20

VAT = 200,000 / 1.20

VAT = 166,666.67

However, if one interprets the furniture cost as VAT-inclusive (where the total price already includes VAT), the calculation changes. Using the same VAT percentage of 20%, we can adjust the formula.

The VAT portion can also be derived as follows:

VAT = Total Cost - (Total Cost / (1 + VAT Rate))

VAT = 1,000,000 - (1,000,000 /

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107,142.86

267,857.14

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