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API Docs
  1. Special Features
  • Getting Started
    • Introduction to Sales Tax Calculation
    • Step By Step - Creating your first transaction
    • Step By Step - Creating VAT / Global Tax Transaction
  • Endpoints
    • Authentication
      • Authentication - Getting Started
      • Create JWT
    • Customers
      • Get to Know
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    • Exemptions
      • Get to Know
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      • Get to Know
      • The Importance of Shipping Address
      • How to Use Credit Memos
      • Get Transaction (thin)
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      • Delete Transaction
      • Get All Transactions (thin)
      • Get All Transactions
      • Upsert VAT / GT Transactio
    • Address Validation
      • Address Validation Intro
      • Validate Address
    • Sales Tax Rates
      • Get Sales Tax Rates
    • Vat Validation
      • Validate Vat
  • Special Features
    • Global Tax Rate
    • Partial Address
    • Discounts
    • Inclusive Tax
    • Vat Validation
    • Post exemptions from CSV
      POST
  • Applications
    • Xero - Integration & User Manual
  1. Special Features

Inclusive Tax

Understanding isTaxInclusive#

This guide explains the concept of the isTaxInclusive flag, how it affects tax calculations, and provides a clear example to illustrate its application. This ensures that taxes are accurately calculated from the amount the customer has already paid.

What is isTaxInclusive?#

The isTaxInclusive flag is used in sales transactions to indicate that the sales price includes applicable taxes. Normally, taxes are added on top of the sales price. However, when the isTaxInclusive flag is set, it ensures that the taxes are deducted from the total amount already paid by the customer.

How isTaxInclusive Works#

Several key aspects determine the application of the isTaxInclusive flag:
1.
Total Amount Paid: When the isTaxInclusive flag is set, the total amount paid by the customer already includes the tax amount.
2.
Transparent Pricing: This approach is useful for providing transparent pricing to customers, ensuring that the displayed price is the final amount they pay.

Example Calculation#

Tax-Inclusive Pricing#

Sales Price: $100 (total amount paid by the customer)
Tax Rate: 5% (0.05)
Total Amount Due: $100
To determine the sales part and the tax amount, the following calculation is used:
Calculate the Tax Amount:
Sales Tax Amount = Original Sales Price * Tax Rate
Sales Part = Original Sales Price - Sales Tax Amount
Therefore, with the isTaxInclusive flag, the sales price of 100includesapproximately5 in taxes, leaving approximately $95 as the actual sales part.
Identify the Sales Price
Determine the total sales price paid by the customer, which includes taxes.
Calculate the Tax Amount
Use the formula to extract the tax amount from the total sales price.
Determine the Sales Part
Subtract the calculated tax amount from the total sales price to get the actual sales part.

Example Calculation#

For a product sold at $100 with a 5% tax rate included:
Sales Price: $100
Tax Rate: 5% (0.05)
Sales Tax Amount: 100 * 0.05 = $5
Sales Part: 100−5 = $95
TIP
Setting the isTaxInclusive flag helps ensure transparent pricing and accurate tax calculation, enhancing customer trust and compliance with tax regulations.
Modified at 2024-06-19 14:15:40
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