Should Gross Profit be calculated on the exclusive VAT amounts or Inclusive VAT amounts?

It is always correct to work out Gross Profit on the exclusive VAT amounts.

Actually gross profit is initially calculated on the cost price of the goods excluding VAT.

It is not correct to calculate gross profit on price inclusive of VAT because the inclusive portion belongs to SARS. In general when calculations are required with figures that include VAT, it is recommended to always remove the VAT portion first.

VAT is treated separately and added to the selling price of the goods

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South African College of Business

Should Gross Profit be calculated on the exclusive VAT amounts or Inclusive VAT amounts?