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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

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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.

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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/

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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/

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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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