Calculating the Value Added Tax (VAT)

Last Updated: May 28, 2014 02:09PM EDT
ProductCart allows you to show your customers the VAT (Value Added Tax) on the products that they are purchasing (product details page) and on the order total (order details page). In some countries, such as Australia, this is called GST (Goods and Services Tax).
 

Assumptions


The system behaves based on the following assumptions:
  • When you enter prices in ProductCart, they are always entered VAT included. When you add a product to your store, the product's price includes VAT. The system gives you the option to show the price without VAT on the product details page.
  • The same VAT is applied to all products sold on the store. You can use a new feature introduced in version 3, called VAT categories, to handle the scenario in which different VAT rates are applied to different categories of products

 

VAT settings


You can configure the following settings:
  • VAT Rate (e.g. 20%)
  • Whether VAT should be shown on the product details page. If set to “Yes”, ProductCart calculates the price without VAT and displays it below the online price. Here is an example of how the price would be shown for a hypothetical product:

Price: £26.00 (Price inc. VAT)
(Price without VAT: £21.76)
List Price: £29.96 - You Save: £3.96

Other options:
  • Include shipping charges in the calculation
    If set to “Yes”, ProductCart assumes that shipping charges include VAT. So when it calculates the total VAT applied to the order, it includes these charges in the equation.
  • Include handling fees
    If set to “Yes”, ProductCart assumes that handling fees include VAT. So when it calculates the total VAT applied to the order, it includes these fees in the equation. If you are using Google Checkout this should be set to “No”.
  • Tax wholesale customers
    Choose whether or not VAT should be shown when wholesale customers are checking out (i.e. if VAT is not charged to wholesale customers, then wholesale prices don't include it, so there is nothing to show)
  • Display VAT ID and VAT ID Required
    You can ask customers to enter their VAT ID and you can make the field a required entry.
  • Display National Identification Number and ID Number Required
    You can ask customers to enter their national identification number (varies from country to country) and you can make the field a required entry. You can change the name of the field shown in the storefront by editing the corresponding text strings in the language files.


 

VAT categories


ProductCart allows you to assign Products to different VAT Rate Categories based on the Product type. You can create as many categories as you need.

For instance, you could assign all “books” to a Reduced Rate category, and all “umbrellas” to a Standard Rate category.

Check the laws in your region if you're not sure which category a particular product belongs to. If all of your products fall into the same category, there is not need to use VAT Categories. Products that are not assigned to a VAT Category will automatically use the Default rate.
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