We struggle to make our Discount/Tax calculation working alright - we tried all possible settings and nothing seems to work as we need (and what we assume as usual need).

We need: Discount to be deducted from Incl. Tax prices, and tax calculation to happen after discount.


Product subtotal excl. Tax = 100.00
Product subtotal incl. Tax (VAT 20 %) = 120.00
Discount (Fixed amount discount for whole cart) = 70.00

Having following settings set in Tax > Calculation Settings:

  • [Apply Customer Tax] - After Discount
  • [Apply Discount On Prices] - Including Tax
  • [Apply Tax On] - Custom Price if available

We would assume this calculation logic:

Total paid by the customer = 50.00 (120 - 70)
Tax (VAT 20 %) = 10.00 (50 * 0.2)

However, what we get is this:

Total paid by the customer = 30.00
Tax (VAT 20 %) = 6.00 (30 * 0.2)

What is happening is this: Discount gets deducted from Excl. Tax Price, instead of Incl. Tax Price (although it is the one which is set in Settings!).

Interestingly, if we change settings of [Apply Customer Tax] to "Before Discount", discounts (both fixed amounts or %) get deducted from Incl. Tax Price. Unfortunately we cannot use this option, as in this case tax get (obviously) calculated from before the discount price.

So the question is - what can we do to make the combination of

[Apply Customer Tax] - After Discount
[Apply Discount On Prices] - Including Tax

work as discount being deducted from Incl. Tax prices & tax being calculated from post-discount total? We assume it should work absolutely fine but it does not in our case and our IT agency cannot find a way to fix it.

If any of you have experience with this, we would be very grateful if you share your knowledge.

[Magento ver.]

Thank you.

  • Did you ever figure this out? – BlueC May 15 '18 at 14:45
  • Hi BlueC, unfortunately we did not. Do you have any solution or ideas what could help? Thank you! – Filip May 16 '18 at 16:04
  • Hi Filip no solution here, I think I am probably going to look at rewriting some of the methods in Mage_Tax_Model_Sales_Total_Quote_Tax but it's pretty complicated stuff. Another option is just to edit the template so it displays the correct calculation even if the stored calculation is wrong. – BlueC May 17 '18 at 14:16
  • I understand. Good luck with that. If you manage to devise any solution and are willing to share that with us, please let me know! Thank you. – Filip May 18 '18 at 15:04

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