How does VAT calculation work at checkout?

Accounting & Taxes
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3

Thanks, @Shay for your reply.

The example you gave of $100 was working for us previously. But our main concern is about the checkout, where Shopify reduces the tax amount from the total product price (as we mentioned in the above query).

As per our investigation so far, we came to know that the setting in settings → market → preference → Include or exclude tax based on your customer’s country is responsible for the reduction in the total product price. We perform the below test cases.

  1. When Enable both the subsequent options “Include or exclude tax based on your customer’s country” & “Charge tax on this product”

Result: Total product amount in the checkout is 0.83, which should be 1 + 0.17 shown as tax separately.

  1. When enabling the option “Include or exclude tax based on your customer’s country” & disable “Charge tax on this product”

Result: Total product amount in the checkout is 1.00, which seems correct because we are charging tax on the product.

Overall it seems an issue from the Shopify checkout calculation side. But still, you can suggest and help us with something.

Thanks