Expresso Store: Wrong tax calculation

Question

Software

EE: v2.10.1

Expresso Store: v2.5.1

Scenario

Cart contains 1 product priced at 1600 (tax included in price)

Shipping is free, that is 0

Tax is 25%

Store outputs

{order_total} = 1600

So far so good.

{tax_percent} = 25%

This too, is correct, but then:

{order_tax} = 320

Correct me if I'm wrong, but 25% of 1600 = 400. I don't understand why Store outputs 320 (ie calculates tax using 20% instead of 25%, which is 320).

I've since checked for this issue on other client sites with the same setup, and indeed there too, this is happening.. which is kind of a problem.

Can anybody advice? It would be much appreciated! Thanks in advance!

Answer 1

This happens because the actual price of the item without tax is not 1200 as you are assuming the actual price of the item without tax would be $1280.

(1280 * .25) + 1280 = 1600
(product price * tax rate) + product price = tax inclusive total price 

For example if I had a product that was $20 tax inclusive with 25% tax applied the item price without tax would be $16 oppose to $15 which would happen when you try to take 25% from the total price of $20