Tax Quick Reference

Configuration Options

Some tax settings have a choice of options that determines the way the tax is calculated and
presented to the customer. Topics in this chapter include:

  • Tax Calculation Methods
  • International Tax Configurations
  • US Tax Configuration Recommendations
  • Canada: Example Tax Configuration
  • EU: Example Tax Configuration

Tax Calculation Methods

Tax calculation method options include Unit Price, Row Total, and Total. The following table
explains how rounding (to two digits) is handled for different settings.

Catalog Prices With or Without Tax

The possible display fields vary depending on the calculation method and whether the catalog
prices include or exclude taxes. Display fields have two-decimal precision in normal
computations. Some combinations of price settings display prices that both include and
exclude tax. When both appear on the same line item, it can be confusing to customers, and
triggers a warning.

Important! Changes have been made from earlier versions for EU merchants or other VAT merchants
who display prices including tax and operate in several countries with multiple store views. If you load
prices with more than two digits of precision, Magento automatically rounds all prices to two digits to
ensure that a consistent price is presented to buyers.

Shipping Prices With or Without Tax

Tax Amounts as Line Items

To display two different tax amounts as separate line items, such as GST and PST for Canadian
stores, you must set different priorities for the related tax rules. However, in previous tax
calculations, taxes with different priorities would automatically be compounded. To correctly display
separate tax amounts without an incorrect compounding of the tax amounts, you can set different
priorities, and also select the Calculate off subtotal only checkbox. This produces correctly
calculated tax amounts that appear as separate line items.

International Tax Configurations

U.S. Tax Configuration Recommendations

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