Tax Overrides behaving differently depending what's in the cart

Accounting & Taxes
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1

Hi

I have a weird issue where when a customer places an order including a product marked with a tax override. On moving from the cart to the shipping/payment screen, Shopify behaves differently depending on what is in the cart. The two situations are:

  1. A Customer orders one item with a 0% tax override and one including standard UK tax of VAT. Shopify correctly charges the full price for both items and calculates the tax based on the different rates applicable to the two items. This I believe is the correct thing for Shopify to do.

  2. A Customer places an order for only one product with a 0% VAT Override. I believe Shopify should charge the full price for this product and show the taxes as zero. However, instead Shopify deducts an amount equivalent to 20% VAT. It REDUCES the sales price of the item. Good for our customers bad for our margin.

I have asked Shopify support and they (including, indirectly the tax team) assure me that this is expected behaviour. It doesn’t make sense to me but maybe I’m wrong.

Does anyone have any experience of a similar problem? I’d be grateful for the community’s help.

Gerry

2

Hello @BBL ,

If a customer places an order for only one product with a 0% VAT Override, Shopify should charge the full price for the product and show the taxes as zero. It should not deduct an amount equivalent to 20% VAT, as this would reduce the sales price of the item and negatively impact your margin.

It’s possible that there may be a configuration issue with your tax settings that is causing this unexpected behavior. I would recommend reviewing your tax settings and ensuring that they are configured correctly to apply a 0% VAT override for the specific product in question.

In case the issue still comes up, you should reach Shopify Support team, they will provide a proper solution.

Let me know if you find anything.

Jen from TrueProfit