Some tax settings have a choice of options that decide how to calculate the tax and display to the customer. For further information, please visit International Tax Guidelines.
Tax Calculation Methods
This method options include Unit Price, Row Total, and Total.
Tax Configuration Options
SETTING | CALCULATION AND DISPLAY |
Unit Price | Magento calculates the tax for each item and shows prices tax-inclusive. To calculate the tax total, Magento rounds the tax for each item and then adds them together. |
Row Total | Magento calculates the tax for each line. To calculate the tax total, Magento rounds the tax for each line item and then adds them together. |
Total | For each item, Magento calculates the tax and adds those tax values to calculate the total unrounded tax amount for the order. Magento then applies the specified rounding mode to the total tax to decide the total tax for the order. |
Catalog Prices With or Without Tax
The possible display fields vary depending on the method of calculation and whether the catalog prices include or exclude taxes. Display fields have two-decimal precision in regular computations. Some blends of price settings display prices that both include and exclude tax. When both of them appear on the same line item, it can be confusing to customers and activates a warning.
SETTING | CALCULATION AND DISPLAY |
Excluding Tax | Using this setting, the base item price is used as it is entered and the tax calculation methods are applied. |
Including Tax | Using this setting, the base item price excluding tax is calculated first. This value is used as the base price, and the tax calculation methods are applied. |
If you load prices with more than two precision numbers, Magento rounds all prices to two numbers automatically to ensure that a consistent price is presented to buyers.
Shipping Prices With or Without Tax
Tax Configuration Options
SETTING | DISPLAY | CALCULATION |
Excluding Tax | Appears without tax. | Normal calculation. Shipping is included in cart total, typically displayed as a separate item. |
Including Tax | Can be tax inclusive, or tax can be displayed separately. | Shipping is treated as another item in cart with taxes, using the same calculations. |
Tax Amounts as Line Items
Store administrators must set different priorities for the related tax rules to display two different tax amounts as separate line items, such as GST and PST for Canadian stores. However, taxes with different priorities would automatically be compounded in previous tax calculations. Store administrator can set different priorities, and also select the Calculate off subtotal only checkbox to correctly display separate tax amounts without an incorrect compounding of the tax amounts. This produces correctly calculated tax amounts that appear as different line items.