How is the VAT amount calculated on my purchase?

On the Neopets site, the tax amount is calculated by multiplying the applicable [tax] percentage rate by the full price of the Neocash purchase. For example, on the purchase of 10.00 USD of Neocash in Austria (where the VAT rate applied to the sale of Neocash is 20% as of 4/1/10), the VAT amount charged to the user would be 10.00 USD x 20% or 2.00 USD.