Many countries print tax-inclusive prices on the shelf, so the tag already contains the VAT or GST. The United States and Canada show the price before tax, and the sales tax is added at the register. Both kinds of tag are honest, but they are not on the same basis. Comparing them directly makes the country with pre-tax tags look cheaper than it is.
Which countries show which
The basis of a shelf price is a retail practice, separate from the tax rate itself. The official sources behind this site confirm the basis for only a few places, so check the tag or the checkout total before you compare anything:
- Germany includes its VAT, at 19%, in shop prices.
- The United States shows prices before sales tax. Apple’s US list prices are on that basis. Sales tax is set by states and localities and added at checkout.
- Canada shows prices before GST, HST and provincial taxes. Which of those apply depends on the province of delivery or purchase.
- The United Kingdom standard VAT rate is 20%, and the UK, German, Japanese, UAE, Singapore and Australian Apple prices recorded on this site all include the local VAT, GST or consumption tax. Tax-inclusive tags are the norm for consumer prices in those markets, but business sellers and some online listings quote net prices, so read the tag or the checkout total rather than assuming.
Why the two tags cannot be compared directly
A pre-tax price leaves out the tax you will pay, so it always looks smaller than the total at the till. A tax-inclusive price already has the tax inside it, so it looks larger than the net price. Put a pre-tax US tag beside a UK tag and the gap mixes two things: the real difference in price, and a sales tax that only one of them has already included.
A common mistake is to remove VAT from the UK tag, then compare that net figure with the US tag. That fixes one side and leaves the other side with its tax still missing. The two numbers now differ by a different amount than the prices do.
Putting both prices on one basis
There are two valid bases, and you should pick the one that answers your question. The checkout basis adds the local tax to every pre-tax price, then compares totals. It answers what you will pay. The net basis removes the tax from every tax-inclusive price, then compares pre-tax amounts. It answers how the seller prices the product, but it only matches what you pay if all the tax comes back to you, which is rare.
The formulas are short. On the checkout basis, a pre-tax price P with a combined rate r costs P × (1 + r). On a tax-inclusive price, the tax already inside is P − P ÷ (1 + r). The calculation rules on this site use the same two formulas.
Worked example: a US tag against a UK tag
Take one product that shows 1,000 before tax in a US store and 1,200 including 20% VAT in a UK store. The 8% combined rate is illustrative. Real rates depend on the address the sale is delivered to, and the checkout shows the rate that applies.
| UK tag, including 20% VAT | 1,200.00 |
|---|---|
| VAT inside the UK tag | 1,200 − 1,200 ÷ 1.20 = 200.00 |
| UK price before VAT | 1,200 ÷ 1.20 = 1,000.00 |
| US tag, before sales tax | 1,000.00 |
| US checkout at an illustrative 8% | 1,000 × 1.08 = 1,080.00 |
| Gap on the checkout basis | 1,200 − 1,080 = 120.00, or 10% of the UK tag |
On the checkout basis the US total is 120 lower, which is 10% of the UK tag. The raw tags suggest something different. Reading 1,000 against 1,200 gives a 16.7% saving, about two-thirds more than the real 10%. The raw comparison leaves out the sales tax the US buyer still pays, so it overstates the saving.
Neither country changes this comparison for a visitor. The US has no nationwide tourist refund, and the UK has no general tourist VAT refund on goods carried home in luggage from Great Britain. The sales tax calculator adds a combined rate to a pre-tax price, and the VAT calculator runs the reverse step on tax-inclusive prices. For the UK position in detail, read UK tax-free shopping.
Why the net basis can mislead
The net basis looks tidier, and it is the right tool when you want to know how a seller prices a product. It can mislead a buyer, though, because it assumes the tax comes back. Take a German tag of 1,190 including 19% VAT. Its net price is 1,000, and the VAT inside it is 190. Set that against a US tag of 1,000 before sales tax, using the same illustrative 8% combined rate as before.
| German tag, including 19% VAT | 1,190.00 |
|---|---|
| German net price | 1,190 ÷ 1.19 = 1,000.00 |
| US tag, before sales tax | 1,000.00 |
| Net basis: 1,000 against 1,000 | No difference |
| US checkout at an illustrative 8% | 1,000 × 1.08 = 1,080.00 |
| Checkout basis: 1,190 against 1,080 | 110.00 lower in the US, or 9.24% of the German tag |
The two bases disagree because the German 190 of VAT is recovered only by a buyer who qualifies for a refund, and even then only in part. A traveler who pays the 1,190 and gets nothing back has spent 110 more than the US buyer. The net basis hides that difference, and the checkout basis reports it, which is why the checkout basis answers the question most shoppers are actually asking.
Reading the tag before you compare
Look at the tag or product page for a note such as “plus tax” or “including VAT”. If the page says neither, the safest test is to put the item in a basket, or ask the checkout what it will total. A tag that is ambiguous on its own becomes clear as soon as you see the total.
Keep the rate and the basis together in your notes. A figure such as “1,000 in the US” means nothing until you know whether it includes tax, which rate applies, and where the item would be delivered. Those three details are what make a comparison reproducible when you check it again later.
Three mistakes that come from mixing bases
- Comparing a pre-tax tag with a tax-inclusive tag, which hides the tax on the pre-tax side.
- Subtracting the VAT percentage from a tax-inclusive price. The percentage applies to the net price, so divide instead.
- Assuming a tourist refund will close the gap. Refunds depend on eligibility, a participating store, export validation and operator fees.
For the second mistake, the how to remove VAT from a price guide shows why division gives the right net figure. For the first, the US and Canadian pre-tax prices guide covers how to find the combined rate at checkout.