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Showing prices inclusive of VAT (tax)
Question
Is it possible to show prices inclusive of VAT rather than exclusive? Most European B2C sites prefer this option and in some countries it is a legal requirement to quote prices inclusive of tax.
Answer
Simply change the config setting pricesinctax to checked ('y' in v5) and prices that you enter on the back end will be considered to be inclusive of tax. The tax proportion will then be calculated according to that item's tax rate.
For display purposes there are actually two options for tax inclusive prices. If you set the config setting showtaxdisplay to checked ('y' in v5), the ex tax price will also be displayed. If you set it to unchecked ('n' in v5), only the tax inclusive price will be displayed.
Note: the price total calculation is slightly different if prices are inclusive of tax. The tax is calculated per individual item, then multiplied by the number of items. The rows in the basket are then totalled. If prices are set to be exclusive of tax, tax is applied to each basket row and then the rows are totalled. These two slightly different methods reflect common financial practice and may result in total amounts that differ by a few pennies.