The taxable rate of retail sales is 4%, and tax is included in sales. The tax amount is calculated by:

Invoice 1000

Then the sales amount is1000÷1.04 = 961.54.

VAT payable is 96 1.54 * 0.04 = 38.46.

If the invoiced amount is 1040

Then the sales amount is1040÷1.04 =1000.

VAT payable is 1000 * 0.04 = 40.

The merchant's statement is wrong, but if you can invoice less, you can invoice as little as possible and pay less taxes. Moreover, if you open a ticket, you have to pay national tax and local tax!