We have noticed some issues in the way shopify calculates the Tax/VAT of an order due to Tax calculations are on the subtotal of the cart, not on each individual item.
We have a product which is £1.66 ex VAT - £1.99 inc VAT.
If I add 25 to my cart the total is £49.80, however 25 x £1.99 = £49.75. The customer is paying 5p more than they should be.
The reason for this is due to how shopify is calculating the price. Shopify is taking the ex VAT price, multiplying it by 25 and then adding the VAT.
£1.66 * 25 = £41.50 + VAT = £49.80
The way a VAT paying customer would work this out would be different though, they see an inclusive VAT price for 1 item of the product and multiply that by 25.
£1.66 + VAT = £1.992 which would be rounded to £1.99 - a 0.2p saving in the customers favour, not important when in units of 1, but when the customer is ordering 25 units it becomes important - 25 * 0.2p = 5p.
Within the admin tax settings we have the taxes are included in my prices checkbox unticked, as we need the flexibility to charge some customers ex VAT prices and some inc VAT prices.
Has anyone come across this issue before and if so, how was it resolved?
I also came across some discrepencies.
-GST is included in price
-Customer orders 2 different products, both at 10 dollars
-An order level discount of 3 dollars is applied
The report is showing different gross sales for each line item:
Product 1: Gross sales $9.09, Discount −$1.37, Taxes $0.78
Product 2: Gross sales $9.10, Discount −$1.37, Taxes $0.77
I would expect the same value for both product for gross and taxes but they are actually different.
There must be some rounding errors in shopify's logic...
Related problem here.
We need to show item prices with VAT and we want them to be round to the main currency unit regardless of the quantity. Unfortunately, this cannot work regarding the way shopify stores item prices, which i believe are scaled integers representing the smallest unit of the used currency that, in our case, formats to a type of two decimals where we would need three or four. So, intermediate high precision calculation would not solve the problem.
To us, the best solution would simply be subtraction of the VAT from the item prices - not just removing the VAT statement - for 'foreign' customers at checkout.