diff --git a/uc_vat.module b/uc_vat.module
index 0259e46..4070df4 100644
--- a/uc_vat.module
+++ b/uc_vat.module
@@ -903,7 +903,8 @@ function uc_vat_apply_tax($order, $tax) {
       $taxable_amount += $other_tax->amount;
     }
   }
-  $amount = $taxable_amount * $tax->rate;
+  //$taxable_amount is inclusive of VAT as patch #898776-9 was applied to ubercart 6.x-2.6  
+  $amount = $taxable_amount - ($taxable_amount / (1 + $tax->rate));
   if ($amount) {
     $line_item = (object)array(
       'id' => $tax->id,