VAT inclusive pricing ?

[Ramesh]

I am building a store based in the UK. The tax which applies is VAT.

VAT is payable by all customers in the E.U.

VAT is currently 17.5 %

I have set up the zones and tax rate prior to building my store.

 

I now have a store with 50 products.

the prices I have entered are all VAT inclusive.

(I just found out !)

Q: How can I modify OSC so that the store will work for customers outside the EU .

At the moment, osc is adding VAT (tax) onto my items for customers in the Zone. (doubling the tax in effect!)

 

Appreciate any help. thx

[tresseh]

I'm interested to know on this one - i took a cop-out and put all prices on as inclusive of VAT, with 0% tax being applied, i read somewhere that VAT has to be displayed at the point of sale - but i assume that my stores method of taking payment 'offline' voids this requirement. Of course, i could be horribly wrong! :shock:

 

One way to make a quick and easy chage to all of your prices already entered is to run an SQL query to update all prices by -17.5% - this would then make the inputted prices exclusive of VAT.

 

If you know something that i dont with regards to eCommerce in the UK, particularly anything 'legal', i'd really appreciate it if you could let me know!

[jon_l]

This has been discussed a number of times.

 

Search the forums for 'vat' and my userid 'jon_l', for info on UK vat rules.

 

Search the forums for 'tax' and my userid 'jon_l', for details on setting up VAT on UK based stores.

 

It is pretty simple, you just need to play around with it a bit.

 

Jon.

[alembic]

For the benefit of those still trying:

Got problems with miscalculations on the checkout_confirmation.php

page as others seem to be having for UK stores and VAT @ 17.5%

 

Seems to be 2 pennies out or not rounded up and showing the sub-total as the proper total.

 

I have read many of the postings so far and none seem to fully address this issue. Tried with Tax "true" and "false" still causes problems. Tried changing Tax values. Deleted all tax classes, recreated them.

Basically I think I've tried everything.

 

I believe British prices should include VAT but at the checkout stage/invoice stage should cleary state the amount of VAT within an order plus the total cost.

 

Anyway I am looking into this and will post my results here. Ok I don't think It'll be good enough for a contribution and maybe ok for companies that only trade within the UK but It may help others with this problem.

 

Or have I missed something. :?

[Christian Lescuyer]

but i assume that my stores method of taking payment 'offline' voids this requirement. Of course, i could be horribly wrong! :shock:

 

I think you are (horribly wrong !)

Just kidding :roll:. But you definitely need to check the rules. Mistakes can be very expensive. I think you have to display VAT included for the general public, and that you have to provide an invoice with the tax rate and tax total.

 

I am not in UK, though, so I can't guarantee this. But the rules are very similar all over the EU. Could somebody knowledgeable confirm?

[Christian Lescuyer]

Got problems with miscalculations on the checkout_confirmation.php

page as others seem to be having for UK stores and VAT @ 17.5%

 

Seems to be 2 pennies out or not rounded up and showing the sub-total as the proper total.

[cut]

Or have I missed something? :?

 

Yes you have. Let's use an example.

 

Item 1 is ?1.00 ex. VAT. VAT is ?0.18.

Item 2 is ?3.00 ex. VAT. VAT is ?0.53.

 

Total is ?4.00. VAT for total is ?0.70.

 

As you can see, the total of VATs (?0.71) is different from the VAT for the total (?0.70).

This has nothing to do with osCommerce. This has to do with rounding. Each VAT will be rounded up or down to the nearest pence. Of course, the total will be off by a few pence sometimes.

 

So you have to choose the way you compute the VAT. Either way will be wrong sometimes.

For the public, I do it so the VAT included prices are right. They don't look at the VAT, so it can be off somewhat. Companies accountants are used to the problem anyway.

[alembic]

This has nothing to do with osCommerce. This has to do with rounding. Each VAT will be rounded up or down to the nearest pence. Of course, the total will be off by a few pence sometimes.

So you have to choose the way you compute the VAT. Either way will be wrong sometimes.

For the public, I do it so the VAT included prices are right. They don't look at the VAT, so it can be off somewhat. Companies accountants are used to the problem anyway.

 

Sorry but I totally disagree with you here:

It has everything to do with Oscommerce and the way that it is calculating the rounding of figures.

Example:

?1.00 x 17.5% = 0.175

?3.00 x 17.5% = 0.525

Totals Net ?4.00 VAT = 0.7

 

Total inclusive price = ?4.70

 

Do this on a calculator 1 x 17.5% + = 1.175

3 x 17.5% + = 3.525

3.525 + 1.175 = 4.70

 

I thought computers were supposed to be more powerful than calculators :wink:

 

Seriously though:

I think that the best way to go about this is to work out the total then form an equation on this value to backward engineer the VAT

In subtotal.php line 30 ish

'text' => $currencies->format($order->info['subtotal']/1.175, true,

(Of course the confusion starts here with the word subtotal)

 

Then in ot_tax.php line 38 ish

'text' => $currencies->format($order->info['subtotal']/1.175*17.5/100, true,

 

This then shows the correct values with correct rounding on checkout_confirmation.php

 

Of course, only use these values for trading within the UK only.

 

Thoughts anyone ?

[Christian Lescuyer]

You are mistaken Sir.

 

If you did not change php.ini, the precision is 12 decimals. This is quite enough to get a proper VAT.

 

Accounting is done with 2 decimals. When you buy a ?0.99 item, do you often get invoices with a ?0.173250 VAT?

[alembic]

Hmm,

Still it all boils down to looking professional. If the buyer sees that figures do not add up they will lose confidence in the store.

I cant remember ever going to a real shop and seeing figures that dont add up.

 

I would appreciate some feedback from UK store owners running Oscommerce and having VAT calculation problems.

[CC]

This is our solution:

 

http://www.casetech.co.uk/index.php

 

Give it a test if you want, and let me know if this is what you are looking to do?

 

It wont be for everyone, but it may help some.

 

CC.

[CC]

BTW - Our site is not live, so feel free to make fake orders and test the whole process.

 

CC.

[scooperman]

CC - that's exactly what I'm after! Can you let me know how it's done on your site please?

 

Cheers.

 

Stu.

[Michelle]

I would love to see how you accomplished this as well. Please do post your solution.

 

Thanks

[Ramesh]

Hi all,

 

I started this topic . And found a solution.

 

Add all countries to a tax zone (RW - Rest if The World )

Add all 15 European Union (where VAT applies) countries to Zone EU.

 

Set RW tax at 0% . Set EU Tax as 17.5 %

Set two tax types. Taxable Goods and Exempt .

 

Make sure Show prices with tax is enabled.

 

Now when a person is visiting the site all prices are shown including VAT.

 

If user creates an account and is in the EU, the prices remain the same.

 

If user is outside, the prices shown are without VAT .

 

If new members joins , its a simple case of moving the country from zone RW to zone EU.

 

Does this help ?

[Ramesh]

Do not try and set a tax rate of 0% , as your OSCommerce Invoices and emails will look wrong.

 

Spend time setting your shop up correctly and you'll be much better off at the end !

 

My Original question was how to reeduce all prices by 17.5%,

easy I ran a SQL query to divide all prices by 1.175.

 

Certain products like the specials, had to be changed manually !

 

If i made a VAT contribution , would tihs help ?

[Scarbee]

This is our solution:

 

http://www.casetech.co.uk/index.php

 

Give it a test if you want, and let me know if this is what you are looking to do?

 

It wont be for everyone, but it may help some.

 

CC.

 

Hey Steve - I like this! How have you done it?

 

best regards

 

Thomas

[Waza04]

This is our solution:

 

http://www.casetech.co.uk/index.php

 

Give it a test if you want, and let me know if this is what you are looking to do?

 

It wont be for everyone, but it may help some.

 

CC.

 

Thats great - I love the way it shows both prices - How did you do that??

 

Also - I see that you have the featured products contrib installed - how did you get that to make boxes around each product (sorry for going off topic)

 

Thanks,

Warren

[matbennett]

The tax system in osC works brilliantly in most situations, but is a bit of a pain if you want to enter your prices inclusive of VAT. This is an issue for one site that I work on where prices change very rapidly and are available only in inclusive format.

 

I've yet been able to get things set up with the right configuration for some of the b2c stuff that I am looking at. Ideally this would be:

- I enter prices inclusive (e.g. ?117.50)

- Prices are displayed inclusive for EU members (e.g. ?117.50)

- Prices are displayed exclude for RW (e.g. ?100.00)

- The invoices etc show the correct VAT amount (e.g. ?17.50)

 

It's only really the first point that causes a problem. (I've even played around with a negative "VAT Free" rate of -14.8936%)

[judgej]

Ideally this would be:

- I enter prices inclusive (e.g. ?117.50)

- Prices are displayed inclusive for EU members (e.g. ?117.50)

- Prices are displayed exclude for RW (e.g. ?100.00)

- The invoices etc show the correct VAT amount (e.g. ?17.50)

 

I think the easiest way to handle this is *always* to enter prices exclusive of tax - even if the data entry needs to be modified to take the tax off when a product is entered or updated (that would make a nice feature - a tick box on the product entry screen to indicate whether you are entering tax-inclusive or exclusive costs). Keep that as a rule across the system, and the prices will be much easier to handle.

 

What happens after that just involves adding tax onto a price for display or inclusion in an order. If the tax-inclusive prices are stored, then you could end up with calculations having to take tax off for the store zone and adding tax back on for the customer's zone. That could get messy very fast.

 

-- Jason

[matbennett]

I think this is the only way at the moment, although I love the idea of prompting for inc/exc when updating prices.

 

This would solve the problem of someone who only ever works in inclusive prices (ie most retail store managers) forgetting to take the VAT out when changing a price. The other common price I see is people doing NET - 17.5% to take the VAT out, rather than /117.5*100 .

[judgej]

The other common price I see is people doing NET - 17.5% to take the VAT out, rather than /117.5*100 .

 

Yeah - messy!

 

I'm just playing with it now, setting up a store for a client. I am going to make the tax-inclusive prices appear throughout the site (which is different to normal), but on the final order split that price out to net+tax.

 

The tricky bit is working out what the tax is. If the visitor is not logged on then the system should assume they are in the same zone as the store. If they are logged on, then I'll use the tax rate defined by the visitor's zone.

 

One dead-end route I went down was setting up different tax classes for the zones. Don't :) Each product can only have one tax class, and so you don't want to tie that to a zone, otherwise the products are tied to zones too (which may not be bad for other purposes). The tax rates allow each zone to tie different tax rates to the same tax class. In general, there will probably only be three tax classes (in the UK): standard, exempt and zero-rated. (UK exempt=not taxed; zero-rated=taxed at 0%; standard=taxed at 17.5%)

 

I think there is a contribution around to do something like this, so I'll take a look at how they do it. What is does mean, though, is that the store needs to look at the tax when the visitor is browsing the products. In the standard store, the tax does not play any part until the visitor reaches the checkout.

 

[What I am not going to even start to think about is what happens when the tax rate changes! The tax rate should really be tied into date ranges, and the appropriate rate used for the order invoice date. That's a problem to tackle on a rainy day...]

[matbennett]

I think that most of the UK stores use tax inclusive pricing (or mimic this by using exclusive at 0%, which really buggers things up). Unless you are going b2b this is heavily encouraged (is it mandatory now?).

 

Whether to show prices inclusive or exclusive by default is tricky. Luckily this is not an issue for my current project as they only delier in the UK. Elsewhere though I have generally stuck with inclusive and put a nice fat "VAT free shopping" graphic to encourage them to register their location. That seemed to work OK.

[Guest]

and what about just going into the code that adds the VAT to the final price and removing that bit?

 

So in the end you enter the prices with VAT inclusive, Osc calculates the tax and shows it on the invoice, but doesn't add it to the total?

 

works here,

 

www.italiana-alimentari.com

 

the salami is good too!

[bren]

hi all,

 

I am looking for some information...

 

We have a site for a client that is selling to the UK market only, so all the tax zones etc are no problem.

 

All the prices we have are inclusive of tax, how can we get the invoice to calculate the tax and display it on the invoice page?

 

Cheers!

[Guest]

Hi Guys

 

I've been following various VAT problems in different threads and was wondering if there was any changes in MS2.2 (that will be released any hour now) that solves this problem we all have?