I have issues understanding how my tax is calculated here: enter image description here

As you can see I have a tax rate of 20%.

But then from a product of £50 the excluding tax price is £41.67.

It is like magento calculates a 16.66% tax rate.

Any ideas? Thanks!

4 Answers 4


Here you have 20% tax that is included in price so you have set product price = 50(that is including tax).

So your product price is without tax is (50*100)/120= 41.666666667, also Shipping price is including tax= 5 ,without tax it is (5*100)/120 =4.166666667

So your Total excluding tax is 41.666666667+4.166666667=45.833333334

Total including tax is 50+5=55

Customer have to pay amount including tax so that have to pay 55.


Check if the correct taxt rule has been applied to that product first. You can do that by going to Catalog>Manage products>Your Product>Prices. At the bottom of that page there is a drop down list with all possible tax rates.

Then go to Sales>Tax>Manage Tax Rules and edit your tax rule if needed. result: https://vatonlinecalculator.co.uk/


OK, it was my bad understanding of how tax is calculated. It is not just £50 * 0.2. I've used this and it gives me the same result: https://vatonlinecalculator.co.uk/


Magneto calculates the right tax amount. 50$ excluding VAT is 41.67. After adding 50+5$, the total is 55$ as in the invoice. You can use different online and free VAT calculators https://vatcalcfree.com/ to add or remove vat from any amount.

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