16% sales tax in a restaurant: price with tax or before it, and how to calculate it
The most common mistake: multiplying a tax-inclusive price by 16% to extract the tax. The right method is different. This is a simple arithmetic explainer for the 16% rate (used as the general rate in the system); for details specific to your business, check with your accountant or the tax authority.
The arithmetic
If the price is tax-exclusive: final price = price × 1.16 and tax = price × 0.16. If the price is tax-inclusive: price before tax = inclusive price ÷ 1.16, and tax = inclusive price − price before tax. Illustrative example: a meal at an inclusive 5.80 JOD → 5.00 before tax and 0.80 JOD tax.
Common mistakes
Multiplying the inclusive price by 0.16, which gives a tax figure larger than the real one. Showing a tax-exclusive menu price then surprising the customer with the addition at payment. Rounding each item separately instead of the invoice, so small differences pile up. And mixing discounts with tax — a discount is normally applied before tax.
What the system does for you
In RAWA the tax rate is set once, so it is calculated on every invoice and shown separately, posted to the books, and the e-invoice is sent through JoFotara on every plan. Always confirm the rules for your activity with your accountant.
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Start a free 7-day trial — no cardCommon questions
How do I extract tax from an inclusive price?
Divide the inclusive price by 1.16 to get the pre-tax price; the difference is the tax.
Should I show the price with or without tax?
What matters is clarity for the customer; many restaurants show tax-inclusive prices. Check with your accountant for what suits your business.
Is a discount applied before tax?
Normally yes, with tax then calculated on the net. Check your case.
Does RAWA send the e-invoice?
Yes, through JoFotara on every plan.