I have an issue with the way Shopify calculates the tax element of shipping charges for my UK shop.
My net shipping rate is £9.93, if I untick the box "charge tax on this variant" it charges £9.93 with no tax (which is correct) If the product variant is taxable (box ticked) it still charges £9.93 but records it as £8.28 with tax of £1.66 instead of £9.93 + tax of £1.95 which is incorrect (it should ADD TAX not calculate tax on a net rate)
If I try it the other way around by providing a tax inclusive gross shipping rate of £11.92 (£9.93+£1.99 tax) instead, I get the following;
Charge tax box unticked, shipping rate charged is still £11.92 with no tax charged which is incorrect (it should DEDUCT the tax not charged of £1.95 to arrive at a rate of £9.93)Charge tax box ticked, shipping rate charged is £11.92 (£9.93+ £1.99 tax) which is correct.
So whichever way shipping pricing is setup Shopify's built-in shipping tax calculations do not work. This is because shipping is assumed by Shopify to be tax inclusive, but shipping inherits the taxable properties of the product being shipped.
UK shipping rates are taxed according to the tax of the goods being shipped. If goods are zero rated for tax, then shipping is also zero rated. If goods are taxable then shipping is also taxable. If a mixed basket of taxable/nontaxable products are shipped, the shipping is taxed proportionally based on the value of the goods purchased.
I've raised a support ticket related to this but I keep being referred to guidance on how taxes are automatically calculated or my shipping app, ShipEasy being the culprit (but ShipEasy just provide shipping rates, Shopify calculates shipping taxes on the rates they receive from ShipEasy) so I'm going round in circles with them.
Has anyone else managed to find a workaround to this issue?
What you said makes sense. But doesn't the second scenario (charging $11.92 as tax) solve your problem? You won't have the box ticked and unticked at the same time right? You will either have them ticked or unticked.
So in the case where it is ticked, you can charge the rate $11.92, and in the cases where you are leaving them unticked, you can charge the rate $9.93.
I have 2 product variants within the same product. Shipping charge is universal across all products. The way Shopify calculates tax, it will either be correct for taxable products if I use a shipping rate including tax, or correct for zero taxed products if I choose to use a shipping rate excluding tax.