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

Accounting & Taxes
1

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!

2

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.

1 Like
3

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)