[FLAW] 5.x Tax system (price inc tax)

[Martin]

This problem affects anyone who sets their products with tax included and sets tax on a per country basis.

Such stores are likely to exist in the UK and EU where tax is usually part of the displayed price unlike say, Canada, where GST and PST are added on when you get to the till/checkout. So this is not an optional thing but a way of working and relates to customer expectations.


What am I talking about? Well to give an example..

Store FBloggs Hardware is based in the UK and sells hardware globally.

They have VAT (UK Sales Tax) added to their products because they sell to end-users (not business to business) and their tax settings in the Cart are set to 15% for all EU countries and not set for any countries outside the EU (because VAT does not apply outside).

For the sake of simplification we're ignoring shipping but normally you'd include VAT on this for EU countries too

So, FBloggs has a really super hammer for £10 GBP (inc tax) two customers go to order it from different countries and tax zones.

Customer #1 is based in the UK and orders this hammer... They get through all the shipping, etc.. info and get an invoice for £10 total which shows they've paid VAT of £1.30.

Customer #2 is based in the USA (outside the EU obviously) and orders the same hammer... Finish the order and their invoice shows them that they need to pay £10 for the hammer and no tax is charged.




Now, in case you missed it... The UK customer pays £8.70 + £1.30 VAT for their hammer while the USA customer pays £10 (with no tax) for the same hammer.

Do you want me to run that past you again?

So, to summarise what the Interspire tax system does is make up the price to the final amount you've set for your product. It doesn't take the common sense/practice option of deducting the tax for the stores base location (ie: the UK in this example) and then charge the non-taxed customers the correct amount which is what you'd expect.


I gave Interspire a heads up about this and they've known about it a while apparently but essentially it's "by design" at this point and there's no plans to fix this as a priority because it's apparently not seen as a bug.

What they fail to recognise is that this is potentially grounds for a store owner to end up with one very annoyed and angry customer reporting the store to the tax authorities in the UK and potentially resulting in an audit.

By all accounts, if you're aware of the issue you can get creative and legitimately charge different product prices for different countries but I'm pretty sure that 99.9% of EU store owners are completely unaware of this "by design" functionality and have not realised they're submitting tax returns that are essentially wrong.

As I said, Interspire, really don't see the problem although I'm sure someone will correct me on this with a "we're aware of the problem" post but frankly this is a major bug and needs to be treated as such.

For now I'd seriously review your tax settings and make sure you haven't submitted an incorrect return.


This is posted on the main Interspire forum too here:
http://www.interspire.com/forum/showthr ... #post56931

[CharlieFoxtrot]

Excellent explanation, Martin. It makes perfect sense to me.

Their "by-design" excuse is getting a little old, though. Nobody is falling for the old "it's a feature, not a flaw" tactic. They underestimate the intelligence of their customers.

[myshop]

I have been complaining about the exact same issue for over a year - We have the same problem in Australia -Except we call it GST.

If a hammer sells for $11.00 inc GST the price is really made up of $10.00 for the hammer and $1.00 GST

If the same hammer is sold to an international customer they SHOULD be charged $10.00 but they are not - They are charged $11.00.

Same problem you have!

Ive been told it will be sorted in a later version, but I have no idea when!