Prices are not inclusive of VAT in this shop, there simply is no VAT (can be, if customer in CH, but is not related to this issue anyway). I don't expect anyone to work backwards from anywhere. On the contrary, I'd hope calculations worked forward from base prices.
And, as I said, it does not matter at all what cost prices are set to. They could be rounded to a hundred dollars - after currency conversion they'd still have lots of digits. And then produce wrong prices in the frontend.
And if you check the original VM demo shop - without changing any of the default settings, the error is right there.