Why isn't my tax override adding up correctly at checkout?

[teemukostamo]

Hi!

I got a store that's registered to collect taxes in Finland. Under Settings -> Taxes & Duties -> European union I've created a product override to collect 14% taxes on applicable products. However, at checkout the tax percentage calculation does not add up.

For example, from a total of 50€, 6,14€ taxes is collected. That's 12,28% instead of 14%. The same problem is with products without the tax override. The default tax should be 24%, but from a total of 50€, 9,68€ taxes is collected. That's 19,36%.

Am I missing something here? What could be the reason for this behaviour?

Thanks in advance for replies!

[TrueProfit_Jen]

Hello @teemukostamo ,

You can check if the tax calculation is being rounded by Shopify. Here's how:

• Go to admin panel -> Settings -> Taxes
• Tax rounding -> select the rounding method you want to use (in your case, I suggest you choose "Nearest")
• Save and test

Hope this can help you out.

Jen from TrueProfit.

[teemukostamo · Accepted solution]

Turns out the calculation is correct, I just was unclear on how it works. It's explained pretty well here: 

https://help.shopify.com/en/manual/taxes/location#include-taxes-in-product-prices

Tax = (Tax Rate X Price) / (1 + Tax Rate)

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