VAT Tax Rate Calculation 'error'

Hi

Re: MarketPress, latest version. We have the VAT Rate set (20%), we have selected 'Apply Tax to Shipping Fees'; and we enter prices inclusive of VAT ... the screen states: "... show all prices inclusive of tax ..."

The problem is that it seems MarketPress correctly acknowledges the product prices we have entered include VAT BUT 'assumes' that the shipping fees do NOT (when they do). Consequently too much tax is being charged.

Clearly, we can (and will) re-enter all the shipping fees exclusive of VAT, but perhaps more clarity is required on the MarketPress 'General Settings' screen to emphasise that even if 'Enter Prices Inclusive of Tax' is selected, shipping prices need to be exclusive of VAT ...

Or am I missing the obvious somewhere in all this :- )

Please advise ... I'll hold off re-entering the shipping fees exclusive of tax until I ehar from you guys.

Best wishes,

Martin

  • esidarap

    Hi Jack

    Thanks for the speedy response (as always from you guys).

    I think I wasn't clear, sorry.

    Here in the UK if you are VAT registered you have to charge tax (VAT) on the product price AND the shipping charges. So what I did was list all products at prices which were inclusive of the tax, and shipping at prices which were inclusive of the tax, assuming that when I flagged the appropriate option in MarketPress, it would 'know' all prices were inclusive of TAX (product AND shipping) ... BUT it still ADDS tax to the already tax inclusive shipping prices.

    I know I can re-enter the sipping prices and list them at a tax exclusive price, but wonder ... am I missing the obvious by having to do this? Clicking 'No' to adding tax to shipping isn't an option because of legislation i.e. the tax has to be seen to apply to shipping.

    For example, I have a product costing £7.49 and add tax at 20% and I am listing it in MarketPress at £8.99. If one of the shipping options is £4.58 I am presently listing it in MarketPress at £5.50 ... but when a customer orders/buys, MarketPress is recognising the product tax inclusive price correctly at £8.99 BUT showing tax overall incorrectly since it adds a further £1.10 in tax calculated on the already tax inclusive shipping price of £5.50 ... so the customer sees a total buy price of £15.59 inclusive, including taxes of £2.60 when it should be £14.49 inclusive, including taxes of £2.41 ... I hope that's clear?

    Best wishes,

    Martin

  • esidarap

    Hi again

    Many thanks for persevering with this :- )

    Yes, that's how it is set up: "Re: MarketPress, latest version. We have the VAT Rate set (20%), we have selected 'Apply Tax to Shipping Fees'; and we enter prices inclusive of VAT ... the screen states: "... show all prices inclusive of tax ..."

    But the problem is it would seem the setting 'set prices inclusive of tax' ONLY refers to product prices and not shipping. This isn't 'logical' is it? We can't NOT 'apply tax to shipping fees' since by law we have to ... I can't understand why MarketPress treats shipping fees as always being exclusive of tax, even when select 'show all prices inclusive of tax'.

    Maybe I'm missing the obvious somewhere?

    Thanks,

    Martin

  • Jack Kitterhing

    Hi there Martin,

    Thank you for the additional information, sorry I'm a little confused here :slight_smile: As my understanding was that if it was set to have tax on shipping and prices are also inclusive of taxes it should be working unless I've missed something?

    Could I have a screenshot of your tax settings, a link to a product I can checkout with (hopefully manual payments :slight_smile: and could you tell me what the cost should be showing.

    Thank you! I look forward to hearing back from you.

    Kind Regards
    Jack.

  • esidarap

    Hi Jack

    Many thanks for your continued patience. Its no wonder nations go to war about big issues when it can be so difficult to communicate effectively on little issues ... no criticism at all ... I know what I want to explain but its not clear when I say it. Sorry.

    Lets try again:

    I've attached a screen shot of the settings as per your request
    We need to sell products which are taxed (VAT) and show inclusive prices
    We need to charge tax (VAT) on shipping charges

    All products on the site display tax (VAT) inclusive prices
    The shipping charges 'table' (weight based) has tax (VAT) inclusive prices

    MarketPress has the 'VAT TAX Rate' at 20%
    MarketPress has 'Apply Tax to Shipping Fees' flagged YES
    MarketPress has 'Enter Prices Inclusive of TAX' flagged YES

    What I EXPECTED to happen:
    MarketPress will know each product price INCLUDES tax (VAT) at 20%
    MarketPress will know each shipping charges INCLUDES tax (VAT) at 20%
    When MarketPress displays the tax (VAT) total, it calculates it this way ...
    Product Price divided by 120 x 100 = product tax (VAT)
    Shipping charge divided by 120 x 100 = shipping tax (VAT)

    What is ACTUALLY happening:
    MarketPress does know each product price includes tax (VAT) at 20%
    MarketPress does NOT know each shipping charge includes tax (VAT) at 20%
    MarketPress correctly calculates the product tax (VAT) in this way:
    Product Price divided by 120 x 20 = product tax (VAT)
    MarketPress <INCORRECTLY> calculates the shipping tax (VAT) in this way:
    Shipping charge x 0.20 = shipping tax (VAT)

    The problem is:
    I cannot simply uncheck the 'Apply Tax to Shipping Fees' box since MarketPress would then NOT calculate the tax (VAT) we have to charge on shipping

    Example: Please see screen shot labelled 'Specific Example'
    Product price inclusive of tax (VAT) = £8.99
    Product price 8.99 divided by 120 x 20 = product tax (VAT) £1.50 CORRECT
    Shipping cost inclusive of tax (VAT) = £5.50
    Shipping cost £5.50 x 0.2 = £1.10 shipping tax (VAT) INCORRECT
    It should be:
    Shipping cost 5.50 divided by 120 x 20 = shipping tax (VAT) £0.92 CORRECT
    So MarketPress has total tax (VAT) at £2.60
    It should be: £2.42 i.e. it's 18p out ...

    Solution:
    Please can you confirm if I should simply enter the shipping charges exclusive of VAT. Whilst that would solve the problem, it doesn't seem logical to have product prices displayed as inclusive of tax (VAT) and shipping charges, during checkout, exclusive of tax (VAT). Also, if this is the solution, may I respectfully suggest the option 'Enter Prices Inclusive of Tax' should read: 'Enter Product Prices Inclusive of Tax'

    I hope this helps Jack

    Best wishes,

    Martin

  • Jack Kitterhing

    Hi there Martin,

    I hope you are well today.

    Thank you for the detailed explanation, I now understand what is going on here :slight_smile:
    I have tested this on my own install and this works, keep it how you currently have it setup and enter the shipping cost with Tax (VAT) and then it should apply the correct Tax (VAT) on checkout.
    Please confirm if this does indeed work and thank you for the suggestion about the label (if this indeed the solution) it would certainly make it clearer.

    I look forward to your response.

    Thank you!

    Kind Regards
    Jack.

  • esidarap

    Hi Jack

    Thanks once again.

    I've not changed the settings, the shipping prices I have entered are still the ones which I know are inclusive of tax(VAT).

    The problem is MarketPress is still assuming the shipping charges do NOT include tax (VAT) since the total tax (VAT) shown in the shopping basket is calculated as per my last post i.e. it adds tax (VAT) at 20% to the already tax (VAT) inclusive shipping charge.

    With the greatest respect, are you sure its working on your site? The difference isn't much, basically its charging 20% tax (VAT) on the already included tax.

    An example, as per the last post, is

    Shipping cost inclusive of tax (VAT) = £5.50
    MarketPress is calculating tax on the shipping cost by taking the shipping cost of £5.50 and adding 20% to it which totals = £1.10 shipping tax (VAT), when it should be the tax inclusive shipping cost of £5.50 divided by 120 x 20 giving a shipping tax (VAT) of £0.92 ... so its overcharging tax by 18p ... which to prove is the case, is 20% tax (VAT) on the already included £0.92 tax (VAT)

    Sorry to keep on with this but I'm embarking on rolling out MarketPress to around 175 sites and so I want to get it right/sorted at the outset.

    Best wishes,

    Martin

  • Jack Kitterhing

    Hi there Martin,

    I hope you are well today, thanks for the additional information.

    I'll flag the developer about the problem with MarketPress presuming the shipping charges do not include tax.

    If you enter them without the tax (the shipping) keep your settings the same, does it then calculate the correct tax amount? It did when i tested this on my own install :slight_smile:

    Thank you!

    Kind Regards
    Jack.

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