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I am doing research on the implementation of certain tax rules specific for Argentina.

A little context:

  1. There are basically 2 VAT rules depending on the product type: 21% and 10.5%, they are mutually exclusive
  2. There are several tax rules based on the customer type, and billing province which are completely unrelated with the products and are calculated based on order amount when the order exceeds a minimum taxable amount.

The first ones are pretty straightfoward.

The second ones are tricky. They are called "percepciones" (for all the research I have done, the closest translation is "collection at source") and the idea behind them is that the store acts as the IRS and charges a little extra to the customer which then the customer will deduct from a certain annual or monthly tax.

For example, lets assume a product valued $200.00 (tax excl.) with 21% VAT. The store has to collect a 2% gross revenue at source on orders $100 and up, so the order detail would be:

  • 1 x Product = $200.00
  • VAT 21% = $42.00
  • Gross revenue 2% = $4.00
  • Total charged = $246.00

Of course the 2% rate is variable depending on customer billing address and customer type (companies have different rates and taxes than people).

I guess what's really killing me is the minimum amount which cannot be set up via Magento.

Also, setting aside the minimum amount, the multiple combination of product taxes and customer taxes would lead to having to create a rule for each possible combination.

For example, a customer could be exempt from paying VAT, but not gross revenue tax.

I would really appreciate any ideas you can throw at me about how to approach this, I am in "brainstorming mode" right now.

For the time being I am seriously considering ignoring Magento tax engine altogether and just placing a custom total hardcoding all of this logic (maybe set up some panel in the backend to twitch the parameters)

Thank you

  • how are other local platforms handling this? – FlorinelChis Mar 8 '13 at 16:43
  • adding the minimum amount for the rule is not that complicated. What are other challanges? – FlorinelChis Mar 8 '13 at 16:46
  • Most ecommerce apps simply don't handle this or any other tax related issue and port all order information to whatever accounting software the company uses "for real". As technology moves forward (and people involved in bussiness start to embrace it) this sort of problem are just starting to pop up. Traditional accounting software have a completely different data structure and logic than what Magento provides – barbazul Mar 8 '13 at 17:32
  • Now I am starting to wonder how adding the minimum amount for the rules would impact in cached prices as you shouldn't apply it to product price unless you have a certain minimum amount in your cart. I guess a little extra should be added to certain blocks cache_key that looks into cart subtotal – barbazul Mar 8 '13 at 18:47
  • Go with the config option: prices include taxes. does that create too many issues? – FlorinelChis Mar 8 '13 at 18:48
2

Other ecommerce platforms are similar to Magento -> tax rate by postal code granularity.

You might want to check out Avalara ( http://www.magentocommerce.com/magento-connect/6760.html ). They do geo based taxed calculation and ( I believe might address the gross revenue tax )

If you decide to write an extension I'd ask (it's probably way more work) writing it as a modification to tax rules. That way you can use the priority value to show it as a separate amount in the cart and perhaps others can expand for their region if they have similar tax rules. Also by coding it that way when a buyer from another country uses your site the engine will be able to appropriately factor out the gross revenue tax rule, etc...

  • I'll contact the guys at Avalara but it looks like they only handle US taxes according to this onepica.com/magento-extensions/avatax/#important-notes – barbazul Mar 12 '13 at 18:53
  • I think the whole Magento tax engine is overly simplistic and needs to contemplate more variants or be more easily pluggable. I don't expect the scope of the current implementation I am working on to solve that core issue though – barbazul Mar 12 '13 at 18:55
  • Getting back to this thread... From a Magento engine perspective I was thinking about how to address your situation - what if you created a product tax class and setup a set of tax rates and tax rule for percepciones. You can then set the calculate on subtotal only flag for both tax rules. So you have a rule for VAT taxes and set of rates. Then you have a separate rule for percepciones and set of rates. You then tie both rules to your percepciones-product-tax-class. I think that'd work. You'd repeat for the reduced VAT rate items. Thoughts? – Chuck May 17 '13 at 14:18

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